Here are just a few ways to completely and utterly dig your startup into the ground, as such read them, and do what you can to avoid them.

1. Have a poorly defined value proposition. Having a poorly defined value proposition will cause you headache after headache when looking at and presenting your business model. You have to know who you are targeting, what you’re offering and why they would want to use your product or service. Who is your customer?

2. Setting unrealistic objectives in your development and deployment pipeline. No matter what you think you will not underpin the world in a year, you will not have income of €20.000.000 in year one, and you will be greatly disappointed.

3. Focusing on the bottom line instead of on the service / product you offer your customers. Your customers are your lifeblood, if they are unhappy your bottom line will suffer, if they are happy, they’ll be repeat buyers, and even help market your product. Simple as that.

4. Involving yourself and your business in ethically questionable practices. Unsavory marketing practices, overly creative accounting are just some of the things that will in the end ruin your business, don’t do them.

5. Developing a product without adequately deploying resources to market it effectively. Sure, you may have a product that could cure cancer, end world hunger, and fly humans to the moon, but if no one knows about it, no one will use it. Market it, and market it effectively.

6. Going on a spending spree. Meaning, poor cash management. You may have €250.000 that you received in the form of F3 (Friends Family Fools) Capital and you think it’s great so you pay a premium for services that could otherwise be outsourced, delivered in a more cost effective way, and get everyone a brand new Mac Pro to write e-mails on. Not a good idea.

7. Launching too early or too late. Timing is everything, think about the market, the economy, the sector you’re in, where is it now, where will it be in 3 months, 6, a ear or two. You don’t have to change the world today, and launching today may lead to failure.

8. Flying solo. Think you can do everything yourself? You can’t. Involve others. Even if you’ve decided to start alone, bring in friends, talk to your network, and see if people will help you out. You don’t have to give them an equity stake in the beginning see how you work together. If you work well, ask them if they’d like to come on board.

9. Forgetting about scalability. Good ideas scale well, milti million ideas scale at their core. How big can your product realistically get? Who is your customer, and how can fast can you grow without compromising service.

10. Secrets are no fun. Talk, and share your idea with people you trust, friends, family, colleagues, these people are inevitable to the success of your business, you don’t know everything, and collaboration can more often than not fix problems before they arise.

11. Doubting your idea early on. Doubt is natural, you will have ups and downs, this is completely natural, but if you doubt your idea within the first month, or three of your start up career. Chances are you’ll become disheartened quite early on and quit. Save yourself the trouble and thoroughly analyze your concept before taking the plunge.

Good Luck!.

Once we had the pleasure of listening to a successful entrepreneur give a talk about how he made it, and how some of his friends who also started companies were faring. Long story short we got to talking about two good friends of his who had started companies years ago. One was now a very successful energy mogul, whereas the other one was still trying to get the idea he had all those years back off the ground, kept on funneling resources into it, he was undeniably unforgiving to his idea. How could his idea not work, after all he had thrown so much time money heart passion and soul into it? Simple answer, it just didn’t.

And when your entrepreneurial idea doesn’t work, the only thing to do is kill it, bury it and move onto the next one. If it doesn’t work, no big deal, the next one will, and if not that one, the one after that, and if not that one…. well… eventually something should hit. But people – they get overly attached to their ideas, they think that the one idea they have and devote resources to will change the world or something here, something there.

Most wont, and the best thing to do is to test it, launch it, if it doesn’t take off. Kill it. Your time is more valuable than the resources you’ll invest into bringing something inherently broken to market.

But how can you identify if your idea is a good idea other than that your friends, and family tell you it is? Follow these simple rules.

1. Does it satisfy a market need?
2. Is it scalable?
3. Who is my market?
4. What are my competitive competencies? Where do I excel?
6. Is my idea really that amazing? If not, it’s no big – more money gets thrown at mediocre ideas with great people than vice versa.

So before jumping into the fire, ask yourselves those few simple questions.

Scalability should be at the very heart of your business model. But what it is? In the formal definition it’s the ability for a business to accept increased volume without impacting the contribution margin (Contribution margin= revenue – variable costs).

Simply meaning that your variable costs should not have a negative affect on your contribution margin, or ideally no effect at all.

The problem with scalability however is not whether or not the business is scalable in itself, you see most businesses will have a scalability range. This is the area where as your revenues increase & your costs shrink, however, no business is infinitely scalable and here’s where you need to start thinking about your business model and your scalable range.

The scalable range, is the level of scalability, meaning that the cost of each incremental dollar must be going down. For the above example, the company’s scalable range is 11.000, another company however may have a scalable range of 20.000, or 4.000.000.

The higher your scalable range, the happier the investor will be in your product, and the quicker you’ll in all likelihood be able to get funding. However, it’s important to remember that there is no such thing as an infinitely scalable business.

However, that does not mean that after a business passes the scalable range threshold it is doomed to fail. At this point it’s important for the founders, board, directors, etc… to sit and analyze the business model.

- Why is it that we are not scalable? What is causing our costs to increase for each additional euro earned?

A good method of identifying this it to follow the KISS (Keep it Simple Stupid) method, meaning that is anyone in the value chain cannot simply explain what it is their job entails you’ve identified your problem, the same can go for what it is that the business does. If someone on the value chain cannot easily explain what the business does, you’ve identified your problem.

Now KISS is not ideal, scalability issues may arise from anything as trivial as paying overtime to your employees to running additional maintenance on your machines, but it is a good place to start. All the same, if you do encounter problems with scalability, try to step out of the circle and see where the problem lies, and ask colleagues, friends, etc… to see if they can’t identify the root of the problem.

With that good luck, and remember the more scalable a business is the more it will appeal to investors. In the end it all comes down to Ockham’s Razor