Biggest mistake business start-ups make

Ever wonder why so many business start-ups fail? It’s because they spend most of their time doing secondary and tertiary activities, instead of focusing on selling their product or service.

Ever wonder why so many business start-ups fail? It’s because they spend most of their time doing secondary and tertiary activities, instead of focusing on selling their product or service.

Why do they do it? The main culprit is bad business advice. Just take a look at this random checklist of tasks business start-up are advised to do:

  1. Brainstorm business idea.
  2. Research the business idea.
  3. Write a business plan
  4. Write a marketing plan.
  5. Choose your business name.
  6. Check if the name is available (nobody else has right to it).
  7. Register the business name and get a business certificate.
  8. Check if the name is available as a domain name.
  9. Buy the domain name.
  10. Check zoning laws.
  11. Choose location and rent space.
  12. File partnership or corporate papers.
  13. Obtain all required licenses and permits.
  14. Reserve your corporate name.
  15. Register state and/or federal trademark.
  16. Register copyrights.
  17. Apply for patents, if applicable.
  18. Get business phone installed.
  19. Determine how your health insurance will be covered.
  20. Obtain adequate business insurance.
  21. Apply for sales tax number.
  22. Find out about labor laws if you have employees.
  23. Apply for employee identification number.
  24. Find out about compensation.
  25. Open a business bank account.
  26. Have business cards and stationery printed.
  27. Purchase equipment or office supplies.
  28. Order inventory.
  29. Order signage.
  30. Order fixtures.
  31. Get an email address.
  32. Find a web hosting company.
  33. Get your web site set up.
  34. Have sales literature prepared.
  35. Get listed in Yellow Pages.
  36. Place advertising in newspapers or other media.
  37. Call everyone you know and let them know you are in business.
  38. Other.

What’s wrong with this list? It’s making novice entrepreneurs believe that—once they have all the required paperwork in place, office space rented, equipment purchased, glossy brochures printed, flashy web sites developed, and everything properly insured and registered—they are in business and, from that moment on, hordes of customers will flood their gates with open wallets ready to spend. Unfortunately, nothing can be further from the truth.

Yes, after you do all of the above, you might have a business… on paper. But, not in reality. In reality, you just spent a couple of months of your time and several thousands of dollars of your funding on setting up a nice shiny cover for an empty box that should be your business. I say empty box, because you still didn’t do anything to prove that all that investment was worth it. You still don’t know if your business idea is viable. So, why spend all that time and money before you are sure they are warranted?

Don’t make the mistake of thinking that your most important task as a starting-up entrepreneur is to file forms, rent space or buy office equipment. No! Your most important task is to focus on selling: finding buyers for your product or service, learning as much as you can about them and then using the proceeds from your first sales to find more buyers and to improve the product/service.

Now, don’t get me wrong. I’m not saying you shouldn’t file required forms, register trademarks, rent office space or print stationery. You should and you will. In fact, you will probably need to do most, if not all, of the things on the list above. But, you need to have your priorities right.

What I’m saying is that your top priority should be selling your product or service and that everything else should be subordinated to it. There are at least 3 good reasons why selling should consume most of your time and energy:

  1. Learn about your target audience — only through direct interaction with your potential customers you can learn who they are, what their needs are and how you can help them solve their problems. Nothing (and I mean NOTHING) is more important to the future of your business than to know your customers.
  2. Prove your business idea — researching on paper, collecting statistical data and making “informed” assumptions and extrapolations is still better than nothing. But the only way to prove a business hypothesis is to go out and test it in the real marketplace. Because reality is often very different from plans and assumptions, the sooner you find out what the real world does to your business idea, the better for you. At worst, you will save yourself time and money that you would have otherwise wasted had you follows some stupid checklist. At best, you will discover how to become profitable long before you get into debt.
  3. Get cash flowing in — selling your product or service is the only way to get money into your business profitably. And, since you need money to run (and grow) your business, the sooner you start selling, the better for you.

Put simply, selling is not only the most important skill you can possess as an entrepreneur. It should also be your top priority in a start-up business. So, look at your daily activities and make sure that at least 80% of your time is spent on selling and only 20% on everything else.