In today’s article, we propose to take a look at all the mistakes that project owners and novice entrepreneurs make. As a market research firm, and especially because we are very active in entrepreneurship, we are in the front line to get a comprehensive view of all the mistruths and preconceived ideas that endanger the survival of an entrepreneurial project.
We come back in this article to the golden rules of entrepreneurship. On this occasion, we translated and adapted a remarkable presentation (“the lies of the novice entrepreneur”) created by Bruno Wattenbergh. We want to thank him here for making his knowledge available to our readers.
- Risks encountered as a novice entrepreneur
- Focus points for the novice entrepreneur
- What is often forgotten by novice entrepreneurs
- The solutions?
Risks encountered by project leaders
As a novice entrepreneur, especially if you have never taken any training courses related to entrepreneurship and market research, the most significant risk factor is you. Fear, over-evaluation, poor understanding of the market, are the warning signs of failure. When you know that 50% of failures occur in the first five years of a business’ existence, there is reason to be interested in all these risks.
We detail here the risks that a novice entrepreneur can pose for his idea.
In his presentation, Bruno Wattenbergh discusses innocent lies and lies of omission. Indeed, as a novice entrepreneur, you have to be aware that an idea launched does not necessarily mean success, even if it is innovative. There are rules, methods and processes that, if you follow them, will increase your chances of success.
It is essential to be aware of oneself, one’s beliefs, apriorism, and the limits of one’s knowledge. Challenging them while analysing your environment, behaviour, opinions and ideas of others, in short, keeping an open mind, will also reduce the risk of failure.
“When, during my research, I discover elements that tend to invalidate my working hypotheses, I immediately note them… because they are the ones, I am most likely to forget!” Charles Darwin
This automatism is very common, especially for novices in entrepreneurship. It is indeed straightforward to omit information that could hinder the project, a well-known cognitive bias.
Focus Points for the novice entrepreneur
We often talk about the corridor syndrome. This syndrome reflects the expression “to have blinders on” which can lead the novice entrepreneur to have preconceived ideas about his market, potential customers, competitors, the economic model, the laws in force or even his idea (lie numbers 1, 3, 4, 6, 9, 12, 13, 16). In some cases, especially for those new to the world of entrepreneurship, the most significant risk factor can sometimes be the project owner himself. The enthusiasm and devotion are, of course, necessary; you have to believe in your project. However, be careful not to neglect figures and analyses (SWOT, PESTEL, PORTER, and so on).
It is essential not to underestimate the importance of comprehensive market research (lie no. 5). We are not talking, in this context, about a simple online questionnaire distributed to your contacts on Facebook, but about carrying out a concrete competitive study, understanding the achievements on your market (via desk research for example), meeting prospects and interviewing them (individual interviews or focus groups), and hiring a representative panel of respondents for the quantitative part.
Of course, so many steps can seem frightening, expensive, and useless for a novice. However, market research will ensure that you don’t embark on a project without knowing the basics. This research phase will allow you to test your ideas, your hypotheses, to define your real target customers, for example, to know your competitors, their strategies and their fields of action.
It is important to emphasise that market research is not a prediction of the next ten years (lie #11). And besides, such projections will not ensure the attraction of investors, banks, and so on, to finance your project. Also pay attention to your forecasts in terms of turnover, profitability, financial plan (lies no. 7, 10, 16). It will be a question of being realistic, precise and detailing the tests carried out the reasoning, and figures to have an impact on investors and banks, for example.
Last but not least, don’t be shy or paranoid. Talk about your idea about your project with the people around you. Hiding it, protecting it, keeping it under cover will in no way prevent it from being copied or imitated (Lies 2, 8, 14, 15). On the other hand, talking about it to those around you, to your entourage, during discussion groups, with other entrepreneurs, will allow you to detect any constraints, stakes and challenges that you would not have thought of, right from the conception phase. (look at step 1 of our market research methodology: this is what we advise you to do).
What is often forgotten by novice entrepreneurs?
They can also be called “lies by omission”: they are not deliberately left out but can drastically impact your business even before it is launched.
Here we will talk about, among other things, the elaboration of your business plan, your forecasts in terms of costs, turnover, and so forth (lie by omission no. 1). Indeed, it is not uncommon to see inaccurate curves: no increase in fixed and variable costs when activity is increasing, when the machines can no longer handle the load and when you are still the only employee. We will not count the number of financial plans that fail to mention commercial, advertising, marketing, design costs, or underestimate their capacity to produce/deliver (lie by omission no. 5).
Not to mention that these elements must also be the result of an established strategy (lie by omission no. 3). Indeed, it is infrequent to see an entrepreneurial project flourish without canvassing. However, the cost of acquiring customers is often underestimated (lie of omission no. 2), as is the speed of return on investment (lie of omission no. 16, lie of omission no. 6). Also, depending on your model (B2B, B2C, B2B2C…), take into account the direct customer and the final consumer, who can sometimes be two different individuals/entities; (example: brands sell drinks to restaurant owners – the direct customer – who serve them to their customers – the final consumer).
The solutions to reduce the risks at the launch of your business
Tip No. 1: Communicate!
The first piece of advice that we keep giving is to communicate! Talk about your project around you, collect impressions, ideas, information, proposals. This will allow you, on the one hand, to remain open to changes, to overcome what we can call ” juvenile sickness ” which could lead you to make any changes after the launch. Become aware of the importance of not sticking to what you know, to your ideas: remain objective.
Be in constant contact with potential suppliers, potential customers, look for factors that could hinder you later on, to overcome them beforehand. Collect the impressions and reactions of everyone, especially experts.
Tip No. 2: test!
Test, test, test! There are many methods such as design thinking, qualitative interviews, focus groups, quantitative studies, which will allow you to make progress on your project, its feasibility, coherence, sustainability, and so on. The tests will allow you to improve your idea, your concept, your business plan and will increase your chances of success.
Tip No. 3: analyse!
Be pragmatic, and above all, analytical. Challenge yourself by trying to understand your market in all its aspects. Carry out analyses of your competitors (direct and indirect, pay attention to substitute products and services), SWOT, PESTEL, PORTER’s five strengths, and above all, remain neutral. Don’t hesitate to call on outsiders to ensure the objectivity of the comments and analyses. Do not hesitate to watch our videos on the subject as well as our courses (for example, our great course on PESTEL analysis which has already been seen more than 250,000 times!).
You should also know that there are many initiatives to support you in your efforts as a novice entrepreneur: discussion groups, communities, incubators, subsidies. In this respect, it is essential to mention that many services can be subsidised. This is particularly the case for market research, which can allow you to have the analysis of outside experts on your market and your project. For more information, do not hesitate to contact us.
Illustration image: ShutterstockTags: entrepreneurship, market research methods