Good ideas don’t come by every day. While there are certainly ways to generate more ideas, most people will only have three-to-four truly groundbreaking ideas in their lifetime, so it’s vital that you capitalise on them and take advantage of any potential opportunities that your ideas may present.
However, when you try to turn your plans from ideas to reality, it’s easy to fall into some common pitfalls that keep your ideas stuck on the drawing board.
The following are the most common traps that many would-be entrepreneurs and industry disrupters fall into. These are the reasons why good ideas die. Knowing what they are and how to overcome them is a key ingredient to succeeding in life and business.
1. Lack of commitment
So, you’ve got a good idea and you have plenty of thoughts on how to make it come to life but there is a problem. Most people like the idea that they have, but they do not have the commitment to execute on the ideas and turn them into a reality.
If you truly have faith in what you’re pursuing, you need to be determined and committed to the cause. You must maintain the discipline it will take to execute things properly.
2. Not enough research
Once you are 100 percent committed to your idea, the next fatal mistake that many people make is that they do not take the time to properly research their business idea.
A lot of people make the mistake of underestimating how important research is to the entire process. But failing to thoroughly research how you can turn your idea into a reality is setting yourself up for failure.
Read as many books as you can. Listen to podcasts. Talk to experts. Do whatever you need to do to have a complete understanding of how to execute your idea and what you can expect.
3. Poor timing
So, you think your idea is ready for the world? Have you considered that the world might just not be quite ready for your idea?
Timing is pivotal to seeing your idea flourish to its full potential. Sometimes, great businesses experience setbacks, because they came in too early or too late to their desired market.
Related: A – Z Easy Small Business Ideas
Analysing your competition so that you can stay ahead of the curve is certainly important in ensuring that your idea can be as successful as possible. But so is being patient and biding your time until you are certain that the market will respond positively to your idea.
4. Lack of strategy
Recent research from the Content Marketing Institute revealed that barely half of all brands surveyed had any sort of content marketing plan.
Developing a winning marketing strategy may seem like a huge undertaking to small business owners, but it doesn’t have to be. Good strategy boils down to two things: 1) effective planning, and 2) well-thought-out organisation.
Planning can often be an extremely boring and tedious process, and the easiest option is simply to have the basics figured out and to wing it from there. However, if you do not have a clear, organised plan for how you are going to take your idea from concept to production, you may encounter problems that you had not expected. The result? The idea is doomed to failure.
As the old saying goes, if you fail to prepare, then prepare to fail.
But let’s say that’s not the case; you do have a plan of execution. Once you have developed it, you need to stay organised.
Whether you track progress and budgets with a pen and paper, Evernote or Excel, you need to track the important KPIs (key performance indicators) and stay organised with your idea.
5. Unrealistic expectations
No matter how much you believe in your idea, it’s wise to not get carried away with unrealistic expectations of overnight success or massive revenue within a few months. It’s okay to dream big, but don’t get disheartened when your idea doesn’t take off the way that you expected it to.
These things take time to develop and grow, and to expect instant success is naive and will inevitably lead to disappointment and failure.
6. Fear of failure
Finally, and most importantly, do not be afraid to fail. There is no shame in failure, and it should not be seen as something that you need to hide and be embarrassed about.
Even if your idea fails, you still did more than 99 percent of people ever will. It takes courage to pursue an idea and put your heart and soul into it, knowing fully well that it may fail, and the simple fact that you have started makes you more successful than anyone sitting on the couch waiting for “someday.”
Failure is nothing but an opportunity for you to learn and grow, and many of the greatest success stories came from the greatest “failures.” So, quash those fears. At the end of the day, the only true failure is not trying and giving it your all.
Related: 10 Business Ideas Ready To Launch!
The graveyard is the richest place in the world – not because of gold or silver buried among the dead, but because of the amazing, world-changing ideas that have died because the people who had them were not willing to execute and take risks.
Don’t be among the majority who allow their ideas to die with them. Take the risk, know what traps to avoid and bring your idea to the world.
This article was originally posted here on Entrepreneur.com
Alan Knott-Craig Answers Your Questions On Money And Partners
From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.
If I get rich will I be happy? — JC Lately
Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.
In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.
These are the top three for old folks:
- I wish I’d spent more time with family.
- I wish I’d taken more risks.
- I wish I’d travelled more.
Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.
But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.
What is the magic number? — Mushti
The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.
Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.
Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.
In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).
I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike
If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).
Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.
What do you think of WiFi in taxis?— Ntembeko
It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.
It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?
Read ‘Be A Hero’ today
What You Need To Know About The Lean Start-up Model
The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.
The model follows key precepts that include:
Taking untested products to market
The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.
When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.
The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology
The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.
Utilising an investigative development method called the ‘Five Whys’
This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Lean isn’t only about spending less money
It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.
Progress in manufacturing is measured by the production of high quality goods
The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
Start-Up Law: I’m A Start-up Founder. Can I Pay Employees With Shares?
Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Can I pay salaries with shares?
South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’. ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).
Employee Share Ownership Plans
There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.
ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.
ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.
The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.
Some key features to consider when setting up an ESOP are:
- ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
- POOL SIZE – what percentage of shares will be allocated to incentivise employees?
- RESTRICTIONS – will employees be able to sell their shares immediately?
- VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?
Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.
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