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The Most Common Mistakes Entrepreneurs Make and Why Markets Tolerate No Shortcuts

by: Geoff Ficke

The question I receive more often than any other is: “What is the mistake you most frequently observe inventors or entrepreneurs making?” The answer is an easy one. Most unsuccessful entrepreneurs try to get to market by taking shortcuts.

We live in a commercial maelstrom. The marketplace is constantly churning, changing, adapting. Successful marketers are constantly adjusting, anticipating, re-inventing. Opportunity for product launches entering this market has never been greater, but there is zero tolerance in this highly cluttered environment for half done, distorted product or service offerings. The commercial markets will simply spit out these otherwise, potentially powerful possibilities.

How do we define a shortcut and why does each definition disqualify the product from successfully positioning itself in the contemporary marketplace? Here is a list of some of the most basic shortcuts we see entrepreneurs attempt to circumvent.

  • No Patent, Trademark, Copyright Filing

Typically the cost of filing and utilizing a patent attorney is the principal deterrent. Many entrepreneurs attempt to fill in the blanks on a template available from bookstores or the inter-net and self-file. We have never, never seen this avenue succeed. There is a reason that patent lawyers practice no other type of law. This is the classic specialty practice. Investors, partners or licensees want to know that the idea they are reviewing has protection.

  • Amateur Prototype or Design

Professional quality, shelf ready prototypes are an absolute requirement when seeking to place, sell or license a product opportunity. The 3-dimension CAD art is also crucial in patent submissions and creating the cost of manufacturing the product. Occasionally the inventor has the skills and equipment needed to successfully create this absolutely crucial design element. However, we usually see amateur attempts to avoid the cost, time and research necessary to properly render the features and benefits of the product or service. This is an opportunity killer.

  • Fictional Sales Model

Inventors are passionate about their creations, and passion is important. However, they often do not properly research the size of their target market, competition and create a sales model that is supportable and believable. What is a sales model? A sales model is a quantified, qualified, well-researched formula to extrapolate the realistic sales potential for an opportunity. Knowing the dead net cost of goods is absolutely essential in establishing a believable sales model. What is the demographic for the product? What is the competitive overview? How does the new product differ in features and benefits from competition?

During year one, two, three, how many store openings will realistically be obtained? What will be the annualized turnover per door? Will there be international sales, kicking in when? A fictional sales model is tantamount to opportunity murder.

  • Let’s Guess the Cost of Goods

It is amazing that learning the absolute cost of goods (COG) receives such short shrift. This number is to a product as blood is to life. If COG is too high, a product has little chance to compete. A low COG, with uncompromising product quality, is essential for success. Each element of a product or service needs to be included in a supporting Bill of Materials with costs extended to fractions of pennies. These are then totaled. Then add costs of freight, customs and duties (if offshore production involved) to obtain a dead net COG. Dreaming, wishing and hoping that COG is accurate is a dead giveaway that the inventor has taken deal-killing shortcuts.

  • This Opportunity Does Not Need a Business Plan!

These are famous last words. No modern home is built without an architectural drawing. A cell phone is designed around highly technical engineering models and art. Retail stores are painstakingly designed and planned. And yet, entrepreneurs, all too often, either will not recognize, or will not commit to writing a customized business plan. Again, an inter-net template is a waste of time. We receive hundreds of Business Plan submissions annually. We are still waiting for the first exciting, comprehensive plan that would be a candidate for funding, license or sale that came off an inter-net download template. This route screams shortcut and lack of serious commitment.

These are only a few of the most common shortcuts we see entrepreneurs regularly take. Most disappointingly, the shortcuts taken will kill otherwise excellent start-up opportunities. There are thousands of new opportunities chasing a limited amount of new enterprise funding dollars. Matching invention and success will not be achieved, no matter how revolutionary the new item, without presenting a fully researched and vetted package for market consideration. No Shortcuts Allowed!
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