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The biggest mistake entrepreneurs can make is to fail to appreciate the importance of a proper Business Development plan. A plan that defines the target customers, the product(s) / service(s) to be offered and pricing, strategic marketing and sales plans, and tactics to achieve them, etc. It's a common pattern for entrepreneurs to construct a half hearted marketing strategy and focus all attention on the development and release of their software. The reality of this mistake hits them when the 10 target customers show a lukewarm response to the product or wish to wait until they can talk to some users. What ensues is a chaotic "all hands on deck" response and frantic activities. The reaction follows the 5 stages of acceptance; Denial, Anger, Bargaining, Depression and finally Acceptance. It isn't until the final stage that entrepreneurs decide to invest in a proper Business Development plan.

The thinking is always the same; all we need are a few customers, they'll spread the news and the sales will start rolling in…we should heavily discount or give the software away . This is the bargaining stage. The Denial and Anger stages tend to happen about the same time and are identified when the entrepreneur calls the customers “idiots” and makes statements like “my idea is too revolutionary for them”. The Depression stage is dangerous for the startup, because at this stage the entrepreneur has lost faith in their idea and they’re questioning the decision to bring the business to life. We’ve had to talk a many an entrepreneur off the ledge during this stage.

Unfortunately during the first 4 stages a lot of time and money can be wasted, weakening the company. In fact we’ve experienced entrepreneurs taking as long as 2 years to get to the Acceptance stage before agreeing to bring in KENOVA to help them with their Business Development strategy.

Far too many entrepreneurs believe if they build it customers will come. The reality is, internet or no internet, sales needs leads, so a sound strategy must be formed to make sure there are sufficient leads.

 

 

For more information on Business Development strategies, see Business Development plan construction and coaching.

 

 

"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."

I recently read the Software Advice post “What VCs Want in a Marketing Exec” by Derek Singleton and although it’s geared mostly towards more established early stage companies with revenues from the $5mm to $10mm mark, it does have some useful information for the startup and gives a good insight on the sophistication of VCs.

 

I especially agreed with the levels of marketing knowledge and experience Derek talks about. For example, my experience with startups is that when they raise investment capital they are overly anxious to fill in the CxO spots, e.g., the COO, CMO, CSO CBDO, CTO, etc., without any regard of the significance of these titles. Given, titles mean little, while responsibility is everything, but a CxO title usual implies 6 figure salaries and certain responsibilities which are usually strategic in nature. I liked what Derek says in this regards, such as the need for the hands-on director level at the startup stage.

 

Also, don’t be so ready to give up these titles as they’re hard to remove, e.g., dealing in the hi-tech world we often see 22 year old programmers given the title of CTO. Typically a 22 year old programmer is focused in the tactical / programming world and is many miles from a strategic thinking CTO. So there’s a good chance the founder will need to strip them of this title pretty quickly when seeking VC money and looking to fill the spot with an experienced strategic thinking CTO. How will this “demotion” affect the 22 year old programmer, who has business cards that say CTO?

 

"This article may not be reproduced in whole or part without including the name of the author (James Naylor) and an acknowledgement of the fact the article was originally published in Shoestring Advice for Technology Startups (http://www.KENOVATech.com/blog). Any other use of this material is unauthorized and is a violation of law."