Three Common Pitfalls of Entrepreneurship and How to Avoid Them

What I learned from starting my own business

17 March 2017

When I started my software company, Lion Mobile, in 2013, I didn’t fully grasp what I was getting into. I made several mistakes, and I’m sharing some of the biggest ones.

In the beginning, it was only my business partner, IEEE Member Fabio Gomez, and myself. We had numerous ideas but decided to focus on a simple one first: developing an app to help people secure their photos on their mobile devices. We designed an app that allows users to select only the photos they want to show another person. That way, when they hand someone their smartphone, that friend doesn’t start scrolling through their pictures and discover one he wasn’t meant to see.

We knew there were many similar apps. But we first had to teach ourselves how to code—which is why we chose to go with this simple idea first. It was the perfect project to learn the basics of developing and launching an app. Although it was extremely challenging in the beginning, our hard work paid off when we finished our first app, PictureLock.

We knew PictureLock wasn’t going to make us millions of dollars. In fact, I think we raked in no more than US $20—basically paying for a large pizza we ordered while developing the app. Nevertheless, when people started to download it, it gave us the confidence to pursue a bigger project that we believed would garner more interest.

During this time, I was just getting interested in wine. I went to a wine store before a date to purchase a bottle, and I found myself overwhelmed by all the different choices. When I asked for help, the wine expert used fancy lingo, which only confused me more. That’s when it hit me: Fabio and I would build a social platform where people all over the world could record their opinion on different wines, enabling others to discover what someone else was drinking. We called it unWine.

Now on to the big mistakes we made along the way and what we learned from them.

  • Mistake 1: Not studying the market

    UnWine was a much bigger project than our photo app, so we decided to grow our team. My business partner worked on developing the app while I began recruiting two more programmers from my alma mater, the University of Texas, San Antonio. From there it was all hands on deck—development was underway, and there was no stopping us. To my surprise, everyone was on board despite not getting paid. They worked for us on the side, mostly in their spare time. I later learned that they did so because they believed in our vision.

    In retrospect, we didn’t have to build the full-blown app right away. Rather than studying our potential customer base, we poured our resources and time into doing what we did best: developing the product. Instead of building every feature at once, though, we should have studied the market. That would have equipped us with the knowledge to create a strategic road map and begin building the most essential features first to fulfill our customers’ most pressing needs. It would have saved us time and money.

    For instance, we spent time building a feature in which people could “toast” each other’s wine posts, similar to hitting the “like” button on Facebook. We quickly learned our users were more interested in adding their friends, but we hadn’t built that feature yet. They were more likely to use the toast feature if they were toasting people they knew.

    How to avoid: Study your potential customer. And don’t just rely on Google searches—immerse yourself in the industry. Have discussions and interviews with all the industry’s major players, and jot down opportunities for improvement. For example, I should have met with owners of wineries, wine bars, wine blogs, wine boutique shops, and wine retailers.

  • Mistake 2: Taking the plunge financially before figuring out if your idea will sell

    Hypnotized by the possibility of unWine being the next top-downloaded app, we disregarded the possibility of it not selling. Because it was a much larger project than our first, we needed capital. For funding, I made the mistake of investing all my personal savings in the project. I believed in its success so much that I really didn’t think twice. That was a misstep, knowing what I know today. There are plenty of crowdfunding sites to raise capital. Moreover, launching a crowdfunding campaign is a great way to test the market and see if your idea is viable before hastily advancing to the development stage.

    How to avoid: Explore methods to test your idea without investing too much capital in the beginning. Leverage crowdfunding sites, like GoFundMe, Indiegogo, and Kickstarter, to see whether other people will even invest in your idea. If not, they aren’t likely to purchase your finished product. There are several startup incubators you can join, too. Incubators help by providing resources to startups, including office facilities and consulting. They also provide seed funding.

  • Mistake 3: Being inflexible when it comes to growth

    Eventually the savings that I poured into the project ran dry, and we needed more money. That is when we decided to take on some projects for clients, building apps for small businesses and startups. I wanted to avoid outside investors as much as possible. I enjoyed owning products with the team, but I was reluctant to give a piece of them away to an outsider. That was part of the motivation to start a business—I could work on my own products and have full ownership of them.

    After a while, the revenue we brought in from clients wasn’t cutting it either. This can be a vicious cycle in entrepreneurship—the constant feeling that you need more and more funding.

    In retrospect, I should have gathered capital in creative ways to bring oxygen and life back into the company sooner rather than later. Fortunately, when almost all hope was lost, we pulled through and remained afloat by partnering with some online wine distributors. That is when our affiliated marketing model was born, and we began to bring in revenue.

    How to avoid: Make an effort to get a consensus from your team on how to grow the company. Bring in a key investor or mentor who can provide insight.

IEEE Member Devon Ryan, founder of Lion Mobile—a mobile app development company in Austin, Texas—is IEEE-USA membership chair.

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