Researchers say entrepreneurs often overlook early warning signs of failure as they cling to common myths about starting a businessTwo of the biggest mistakes entrepreneurs make is having a solution in search of a problem instead of the other way around and ignoring financial red flags. Photograph: iStock
Turning an idea into a tangible business is a potent driving force but it’s also a potential Achilles’ heel if the drive becomes all consuming. It can be easy to lose the clear line of sight and two of the biggest mistakes wannabe entrepreneurs make is having a solution in search of a problem instead of the other way around and ignoring financial red flags.
Their findings are based on an eight-month study of entrepreneurs in a business incubator during which the researchers sat in on their financial forecasting meetings in order to assess their reactions to the figures and find out what actions they took on foot of what they’d heard. Financial problems clearly raised anxiety levels among the entrepreneurs yet, more often than not. they continued to plough ahead even though the chances of turning things around were slim.
Prof Puyou adds that entrepreneurs typically use similar tactics to overcome disappointing performance – such as redoubling their efforts, willingly forgoing a salary and boosting sales forecasts even though they often rely on as-yet-unproven new services or products for this. One way he suggests of keeping things on an even keel is to ensure that, where there’s a team of people supporting an entrepreneur, its make-up should be as diverse as possible with a good mix of both assenting and opposing viewpoints.
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