Don't stumble at the start

The Life: Hans Schwab, a serial entrepreneur based in the UAE, shares fatal mistakes start-ups tend to make.

Having the best equipment or creating the best kick-off image does not ensure success to new businesses. istockphoto.com

Fatal mistakes within start-up companies are often made as early as their inception.

A major one is the temptation to spend money and time on things that are not critical to the success of a project. Assuming that you are convinced your product or service is the next new thing the world needs but doesn't yet know about, there are only three things an entrepreneur should focus on: developing the best product or service possible; hiring the best talent you can afford for each function; and acquiring clients and customers.

When it comes to developing the product or service, an entrepreneur must be the ultimate judge.

There are likely to be many diverse opinions, but entrepreneurs must trust their own intuition about their venture. On talent, hiring the best people is one task where most new entrepreneurs fail because of the widespread tendency to hire the people with whom we are most comfortable, instead of the best individuals for the function.

And when it comes to clients, they are always harder to acquire than one anticipates. In most cases, not enough effort is put into the client acquisition process. It is usually beyond the entrepreneur's understanding why anyone would not buy their product or service.

The stark reality is that the first customers are hard to get and translating verbal promises into actual revenues can be a difficult and, sometimes, even humbling process.

With these three focus areas in mind, the successful entrepreneur must categorically refuse to spend any time or resources on anything that is not "project critical". But entrepreneurs are often tempted to jump ahead and do the things that should be done when the venture is already successful.

The distractions include acquiring the best gadgets money can buy, ordering a year's stock of business cards or stationery with contact details that will probably change within months, and commissioning glossy brochures of products or services that are still a "work-in-progress".

Some also tend to splurge on other expenses, such as buying a designer ergonomic office chair.

Yet all of these activities lend to the delusion that creating the right kick-off image will sell the product or service better and faster.

If the venture has benefited from investors capital, your duty is to treat every dirham with the utmost respect, as your investors have made a choice to trust you and your ability to succeed.

To be sure, there will come a time for any successful business when a well-furnished office will be part of its image.

But for a start-up, the first real clients are acquired solely on the venture's ability to deliver a high-quality product or service.

The delayed gratification of postponing acquisitions that are not project-critical provides a far greater feeling of accomplishment.

With the maturity that comes from developing a thriving business, one later realises that what seemed so desperately important earlier, might no longer be relevant or even desired.

Hans Schwab has created and managed five start-ups in his career. He has also held management positions with the World Economic Forum in Geneva and is now based in Abu Dhabi