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Wednesday, September 1, 2010

10 easy steps to entrepreneurship failure

On the WSJ website, Rosalind Resnick offers a list of “10 Mistakes that Start-up Entrepreneurs Make:”
  1. Going it alone.
  2. Asking too many people for advice.
  3. Spending too much time on product development, not enough on sales.
  4. Targeting too small a market.
  5. Entering a market with no distribution partner.
  6. Overpaying for customers.
  7. Raising too little capital.
  8. Raising too much capital.
  9. Not having a business plan.
  10. Over-thinking your business plan.
This is a reasonable list, a cautionary tale that can be offered to any entrepreneur. The under-emphasis on sales and distribution is a long-known problem, particular for product-focused tech entrepreneurs.

On the other hand, there is always a problem with one-size-fits-all advice. In particular, her advice on business plans — yes they’re always needed — is a biased and oversimplified summary of a much more complex and nuanced decision that entrepreneurs must make. There is rather extensive research on business plans, which is not referenced: for example, it’s clear that not all entrepreneurs need a detailed business plan.

So I’d certainly give the list of gotchas to entrepreneurs, but note that these are potential problems they should look out for, not necessarily guidelines for what they should or should not do.

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