Many businesses collapse as a result of common, preventable issues – and understanding those issues, before they do any real damage, can put you in a position to prevent or mitigate them. Start-ups are especially vulnerable, with limited resources and a weak, volatile structure, but entrepreneurs can prevent disaster simply by taking measures to look for these all-too-common pitfalls.

Drive and optimism are the fuel for entrepreneurial fire-that doesn’t mean you don’t need to exercise caution. Carelessness has a price, and for any #business, especially the small ones, a few missed details can pile up quickly. Like small fishes, small businesses tend to have short lifespans. That’s partly because small businesses, by their very nature, have few resources to draw on when times get tough – or even when they are too good. With the odds stacked against them from Day One, there are at least as many ways for small businesses to fail as to succeed.

Here are seven pitfalls Entrepreneurs encounter and ways to avoid them:

1. You Think You Know

Ignorance is dangerous and costly, but much less so than knowing something that is untrue. When doctors misdiagnose and treat the wrong disease, or when entrepreneurs proceed out on a path out of conviction rather than evidence, its mostly a disaster. Rather than the popular myth of an #entrepreneur as a fearless risk taker ignoring naysayers to pursue their dream, successful entrepreneurs have a detailed and perhaps unique understanding of a real problem, gained from answering structured questions with real data, from real customers.

How can you be sure you are not making up your own truth? The solution has been working for civilisation for quite awhile now, which is to apply The Scientific Method. Create a question, run an experiment, and reach a conclusion. Whether your idea involves, software, hardware, mobile, physical goods, its never been easier to collect real information. Run campaigns on social media to see if anyone cares about your products or services. Also run Google adword campaigns to test messaging and find target audiences. Once you are open to collecting objective evidence to support your idea and plans, you are on the right path or at least on a better path.

2. Idea is Everything

Ideas are necessary, but hardly sufficient. Believing that the idea is more valuable than it is leads to silly behaviour and replacing solid planning with wishful thinking. For every great company there were countless people with that basic idea. Most people never did anything about it, and a few more messed it up in the details. Investors from specific industries, like drugs or medical services, cite 5% as the maximum value of the idea relative to all the costs that go into a successful exit. Therefore get over your great idea and move on to making it happen.

3. Product is Everything

Plenty of business teams work on a product, thinking that if they build a great product and launch it, everything else will fall into place. Its easy understand as product development is more interesting than most things they have to do. Plenty of these teams launch and then fail anyway but a lot of that failure might be avoidable if they had simply approached the problem a little differently.

Before you work on your great product why not take the time to answer a few questions first. For whom is your product intended? How do you reach them? What does it cost to acquire those customers? When and how do you extract value? How much? No matter how little time you think it takes to make a great product, surely answering and validating the answers to a few questions will take a lot less time?

4. The Founder is the Typical User

In many businesses, the founder makes all product decisions. Its horrible to work with founders like that and also demoralising for the product team creating a product for simply one user in the office, unable to add value without talking to that person. Product decisions become highly charged personal arguments between team members, ans the results are based on who screams loudest. Its even less helpful to the marketing or sales team, trying to implement plans to reach the one user for whom the product was designed, who already knows about the product.

The solution is product designed based on User Personas. Simply, you make a structured story describing different types of users, or sometimes even non-users. Focus on describing a user’s goals, wants, needs, capabilities, fears, motivations, and where they find solutions. You can either make up the description and then try to validate your guesses with real evidence from surveys, focus groups etc. or extract the descriptions from interviewing potential users. There is a healthy debate about the best way to do this, but trying out any User Persona Methodology is vastly better than not. Getting User Personas right takes some practice. They do not work if they are too vague, or too specific. They need a certain amount of detail, but not too much. They need names too. Most importantly, user personas take a lot of the emotion out of feature discussions, leading to better product decisions.

5. Can’t Clearly Describe the Product

Some founders can’t clearly describe what they are building. They can talk for minutes or hours about what they are doing, but when they are finished listeners still don’t have any idea what they are trying to build, for whom, or why. Sometimes, the closer you are to something, the more difficult it is to extract the parts of your idea that are really valuable to others. What is interesting to you as a creator may not be what is most interesting to others.

The solution is to understand the difference between “grabbers” and “holders”.

A “grabber” is an idea or feature that brings a new user to your product.

A “holder” is something that keeps them happy after they use it.

Take everything you want to say about your product. Write them as bullet points. Now, classify them as “grabbers” and “holders”. Grabbers are things that somebody needs done or wants to do, like “rent a car for an hour” or “reduce your energy bill” or “Get takeout delivered to your house without talking on the phone”. While they may be interesting or even vital, holders are not something anybody wants in isolation. Holders might be “intuitive design” or “works from Android and IOS” or “lowest cost.” None of these are important until you grab listeners with why anyone cares about what you are doing in the first place. Never talk about holders outside the company. Ever. Founders love to focus on holders, but outside the company, nobody cares. Focus on the grabbers.

6. Financial Plans Based on Events, Not Goals

Sometimes its funny how disconnected entrepreneurs and investors can be. Founders tend to think of goals as events, like a launch or hiring a team. Investors don’t care about goals like these. Founder-type goals are just a means to the end, the end being to make investors more money. Early state investors decided that the best way to make money is to invest in start-ups, obviously, but their goals for your company can be defined by metrics, like attracting users, achieving a substantial growth rate, revenue growth, or some measure of, or proxy for, value creation. Plenty of start-ups make it to the launch but then struggle to validate any investor-type goals just as they are running out of money. They are then stuck raising money after most of the hard work has been done, and exactly when they have the least to show for it. Not good for the founders and easily avoidable with better planning. Shockingly, many start-ups don’t even think about their goals post-launch. If you ask them, “after you launch, what does success look like? they can’t even answer the question.

Do you have the resources, ie. money, to get to launch and still have funding to get past that validation phase, and then raise more money? If not, can you get to launch faster? Strip down your minimal product? Or maybe you can test value creation without a product at all, with a leadgen marketing. Another way to approach this is to create your next pitch deck. Imagine what you would be telling potential investors as you enter your next fundraising cycle. What have you accomplished? How have you measured that? What are you going to do next, and how do you measure that? Run it past your investor friends or existing investors. If that pitch deck were true, would they want to invest (more)? If not, maybe its time to rethink your goals and how you are measuring them.

7. Lack of Focus

Start-ups are hard. Really hard. At every step of the way they just get harder. Start-ups are chaotic, too, and its easy to get distracted. Its difficult to decide what is important. Getting distracted from the important goals, though, will make everything that much harder, and will waste time and money that start-ups never had.

So how do you avoid this pitfall? It sounds easy, it will make sense, and you will surprised at how difficult this is. Rank order the goals you think are important (its also a good idea to write down how you measure the success of your goals). Cut off the bottom quarter. Then make sure everything you do is justified by your list of goals.

By no means are these pitfalls intended to cover every possible disaster that could befall your company. There are plenty other dangers that could weaken your brand or compromise your internal structure – but these are some of the most common and some of the most preventable.

FINAL WORD

As the leader of your company, your sight needs to be focused on the distant horizon, not on the small day-to-day problems that almost always work themselves out naturally. Keep watch for those encroaching hazards, and take immediate actions to thwart them before they become irreversible.

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