Expert cautions entrepreneurs on mistakes leading to business collapse

A professor of entrepreneurship at IE Business School, Spain, Mr. Peter Bryant, has cautioned entrepreneurs in Nigeria on the need to focus on customer acquisition and proper management of cash if they intend to avoid pitfalls that will lead to the collapse of their businesses.
Bryant, in a presentation titled: “Entrepreneurial mistakes and how to avoid them,”, delivered at the KPMG Alumni seminar with the IE Business School in Lagos, said one of the mistakes entrepreneurs make is that they squander cash too fast without understanding their runway to revenues, while others raise money, then think of ways to spend the money.
According to him, to avoid this mistake, entrepreneurs should be able to understand how long their cash will last to achieve revenues, while urging them not to seek too much cash as it will make them complacent and careless.
Another mistake, Bryant said, is the situation where entrepreneurs seek investors rather than customers. This, he said is due to the fact that most entrepreneurs pursue capital and not revenue.
He advised entrepreneurs to make customers’ acquisition a part of their funding strategy, while focusing on strong revenues, as it helps improve valuation and reduce financial pressures.
He listed the mistakes entrepreneurs make to include: ignoring competition; having the notion that customers will always come, believing that winning one per cent of $1 billion is easy; deferring decision due to uncertainty and engaging in unethical conduct with the belief that no one will find out.
Others are: putting investors before customers; believing in the ability of the business’ ‘website to draw customers to the business; poor cash management; delay in adaptation to changing times and failure to learn from mistakes.
In the area of ignoring competition, Bryant noted that some entrepreneurs claim not to have competition or that incumbents do not pose a threat to their business, while others analyse the competition once, ignoring future threats until its too late.
He said these entrepreneurs fail to see a new competitive player coming ahead until it is too late.
To tackle this, he advised entrepreneurs to search widely to identify current and potential imitators, and also urged them check often, as competitors’ initiatives and startups may be difficult to see.
“Entrepreneurs should ask themselves if the market really exist if there is no competition,” he stated.
On the failure of entrepreneurs to learn from past mistakes, Bryant said, “some entrepreneurs refuse to admit mistakes. They see it as a sign of weakness or shame. However, to avoid this mistake, entrepreneurs are advised to take responsibility for mistakes and acknowledge errors.
“They should also establish processes that allow for mistakes to be diagnosed without blame or punishment, accepting and welcoming good mistakes while avoiding stupid ones.”