I mentor many college students, including those at Colgate University (my alma mater) for the school’s own entrepreneurship program, TIA – Thought Into Action Institute.
There are a few classic mistakes that just about every young entrepreneur makes when starting a business. Avoid making these to save yourself precious time and money.
Mistake 1: Spending too much time developing the product and not enough time selling it
Most young entrepreneurs spend far too much time in the “lab” before ever getting out in the field. Tinkering too long with a prototype and deliberating on patent filings are common mistakes that should be avoided, and are typical for young people who spend most of their time in the classroom. After all, you’re generally rewarded for the amount of time you study and are given weeks to complete assignments rather than days. School is an environment that lends itself to deliberation rather than execution. Never be afraid to put your best complete product in front of customers and try to sell it. If you don’t have sales (acquisitions, users, etc.), then you don’t have a business.
My motto is, “Sell first, build later.” There is no such thing as a perfect product, just a complete one, which is why I’m such a big advocate of Eric Reis’ The Lean Startup, and the MVP (Minimum Viable Product.) An MVP is an example of the minimum product that you can show a customer that works and that he will pay for.
If you spend too much time trying to perfect a product before getting customer feedback, then you’re going to waste precious time that you could be spending interacting with your customers finding out what will get them to write you a check and to come back for more.
Mistake 2: Being afraid that someone will steal your idea
Too many students let fear guide their decisions when bringing a product to market. Never be afraid to test your product before you think it’s ready. The naysayers will tell you that it doesn’t work, and, those who love it and give you useful feedback will be far too busy to ever take your idea and put it into action anyway.
Creating a company is hard work, and very few people are just going to take an idea that isn't even proven to make money yet. If you need to find a developer, file a patent and incorporate, sell your product to clients, and do all the other things that a startup needs to do to get going, then your copiers will too. Ideas are everywhere, but there's no such thing as a million-dollar idea, just million-dollar execution. And you need to get your product in the marketplace in order to gain traction and execute.
Mistake 3: Thinking that you are your customer
You are not your customer. The way you would use something is not necessarily the way that your customers will use it. Let them tell you what they will pay for, and then deliver it to them. If people aren’t willing to vote for your product with their wallets by buying it, signing up or making some other economic decision, then you must find another model. I encourage most students to take a step back and instead of creating a complicated business, just go out and sell something. Buy an inexpensive product for which you can retain a margin, and sell it. Get in the habit of selling because business is about sales.
Mistake 4: Trying to monetize ideas rather than monetize sales
If you ever want to take a test to find out where your business is really at, write an email to a few of your close friends and describe to them the next two months of your operations. If your email contains too many "could be's", "might-be's" "needing to find the right developer" type sentences, then chances are you have a project and not a business. When you have a business with sales, you will talk about what you need to do to monetize more sales. You move out of dream space and into reality.
Once you have a business model that actually works, the excitement of endless possibilities of monetization will be replaced by what you need to do specifically to sell more of what people are already buying. Until you find out what those revenue streams are, you need to keep iterating until they become apparent.
To talk about the many ways to monetize something before figuring out plainly how your customers will pay you for it is always premature. Monetize money first, then monetize your additional ideas later.
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