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One of the biggest misconceptions about entrepreneurship is that once you crack the code to sales, you’ve created an invincible money-printing machine. A lesser-known truth is that a few looming perils can doom even an initially successful business to failure, and you may not see them coming until it’s too late. Here are seven perils to keep at the forefront of your mind so that you can steer your business clear of the death traps ahead.
1. Failing to predict that your well might dry up
If you’re one of those lucky founders with direct access to the right target market for the product or service you’re peddling and begin amassing word-of-mouth sales through friends and family without spending a dime, you could be susceptible to an unexpected drought. While free organic marketing is great, it seldom lasts forever and may leave you shocked when your network’s demand dries up, especially if you aren’t selling a recurring revenue product.
The solution to mitigate this disruption is to accept that your direct network isn’t the entire universe; once it gets saturated, you’re going to need to generate new leads and reach a broader market. Thus, lead generation and audience growth is one of the most under-emphasized, yet mission critical priorities for early-stage founders.
2. Chasing publicity without a post-viral conversion plan
If you’ve been the beneficiary of earned media features that have catapulted your sales, it’s easy to keep chasing after more press. However, most stories become old news, and your time might be better spent leveraging and repurposing those prior media features to increase your conversion rate with your own marketing. Viral press without a post-virality conversion plan is a missed opportunity that puts a ticking clock on the longevity of your media-derived sales.
3. Putting too many eggs in this (or any) basket
I have a friend whose business rapidly skyrocketed into the millions using ads on one platform. Industry competitors took notice and flocked to this platform as well, throwing all their eggs into the seemingly lucrative basket. Along with competition came some unscrupulous players, and before long, the platform had largely banned ads in this industry, cracking down on even the most benign promotions. That friend had to scramble to attempt to replace the precarious marketing channel after saddling her booming business with high recurring expenses.
If you rely too heavily on any one platform, technology or person, you’re accepting a huge risk and vulnerability. Before you build out a large marketing team around one channel or over-invest in one platform, diversify or brace yourself for an unannounced rug pull.
4. Failing to anticipate the changing tides of seasonality
Sometimes you’re a marketing genius, and other times seasonality, current events, timing or luck may propel a surprise sales boost. If you recently launched your company to an overwhelmingly positive reception, you should critically and objectively consider the factors behind the success and whether any of them may have a finite lifecycle.
I launched a business during a perfect storm of seasonality, world events and industry favoritism, which resulted in abnormally accelerated results. At the time, I didn’t realize going from $0 to $20k to $60k in a few months with the same marketing strategy isn’t actually normal and likely wouldn’t continue forever. I failed to anticipate the steep drop-off that a change of climate, seasonality and market favor would have on my business, and my devastating panic nearly led me to quit altogether.
Entrepreneurship means weathering high highs and the low lows that follow. Ride the seasonal or trend-based waves, but critically assess which outcomes are attributed to your own actions versus external factors you can’t replicate or control.
5. Lacking backups — for everything
Depending on the type of business you run, you might assert that backups aren’t mission critical for you or your clientele. I’m here to prove that toxic fallacy 100% wrong. Whether you sell a physical product, digital product, service or other offer, backups are the lifesavers you’ll only need when you definitely don’t have them.
My company ran a huge sales promotion to 400,000 leads the same day our checkout system provider crashed. We scrambled to create an alternate invoicing and checkout system or risk losing thousands in sales. One of my ventures was hosting premium digital events the week a power outage swept the East Coast, where half our customers resided. Our backups, pre-recordings and offline versions of our company’s online resources insulated us from tens of thousands in refunds.
From your software to your content to your hardware, you should have backups for everything, or prepare to pay the price.
6. Delegating over educating
The last thing you want is to create a business in which you’re the least valuable player. Delegating too fast, too much and as a replacement for educating yourself can foster this exact phenomenon. Resourcefulness is easily the most valuable skill for entrepreneurs, but those who pay every problem away without digging in risk cheating themselves of the very experience that makes entrepreneurs so versatile and valuable.
While delegation can save time and uplevel your company with expert talent, I suggest entrepreneurs attempt to learn each task first before hiring. Otherwise, you just may find you lack the skills or knowledge to step in and take action when unforeseen emergencies surface and your go-to talent isn’t around.
7. Building yourself into the perpetual equation
You can be the face of your business, but one key foible that sneaks up on many client-facing founders and solopreneurs is inadvertently building themselves into the perpetual equation of their business operations. Making yourself an irreplaceable part of your operations can limit the venture’s scale and even take exits and changes of ownership off the table. Think long and hard about how strongly you want to anchor your individual involvement in your business. If you don’t, begin building systems and roles that could be accomplished by a hired team, while you’re enjoying a beach vacation or diving into a brand new pursuit.