Why most entrepreneurs fail to build a successful business and what you can do instead to succeed

Ovi Negrean
Nov 30, 2017 · 9 min read

Most entrepreneurs fail.

It’s not their fault. It’s how popular culture, silicon valley (the series), and entrepreneur magazines headlines teach us.

What they fail to tell us is how those success stories are the outliers. The anomalies. The 0.01%.

Chances are your startup won’t be as big as Facebook; you won’t become as famous as Steve Jobs; and you won’t be the first to colonize Mars.

Still, entrepreneurs take chances they would never take in Vegas, and bet their dreams, savings, and a few good years of their lives.

Of course, you don’t leave it up to chance. You put your blood, sweat, tears. Read all the business books. But 95% of business still fail. While if you bet on red or black you have a 50–50 chance.

But have no fear. The Sell → Service → Scale, Alternative Startup Methodology is here!

Keep reading to find out how you can drastically minimize the chances of your business failing while swinging for the home run we’re all longing for.

Entrepreneurs who fail all make the same 3 mistakes. Let’s understand what they are so you can avoid them!

1. The false assumption that you’ll “build it and they will come”

Most entrepreneurs — especially founders of a tech startup, focus on building the product first and think that monetization will naturally come after.

Some are even under the impression that they won’t have to market for themselves and that customers will just find them. A large majority of these people come up with this delusional vision even without any market validation.

Yet they fail to realize that if they don’t build the right product, they won’t provide enough real value and in turn, they won’t be able to generate substantial revenue.

They also feel they can’t ask for money unless they have (what they consider) the finished product.

This is anything but the case.

In reality, monetization that is defined early on shows proof of a real business. You can sell the results well before you have the end version of your ideal product.

The best validation you can have for your startup is paying (and ideally returning) customers.

You can find the first customers within your existing network, referrals, or by using SocialBee.

This won’t just get you those initial, vital (especially for a bootstrapped entrepreneur) sales, but they will help you validate your product or service, and guide you to create a great product or service the market really needs.

You have to sell it first, build it later.

When we started nugget we just focused on creating a great product and how to get people to use it. We said we don’t have to think about monetization right away, as that will take care of itself later on.

People downloaded our app, told us how brilliant it was and how much they loved it, but the user return rate was not supporting their positive feedback.

We had a cool idea, that we thought would be a solution to a problem many wanted fixed. We failed to see that our app was a vitamin and not a pain killer. Vitamins are nice to haves. Pain killers are must-haves.

This made nugget a nice product but a lousy business.

Having our bootstrap savings running out, we couldn’t afford to make the same mistake with SocialBee.

SocialBee.io — Social Media on Autopilot

So we flipped the model and started selling the vision and most of all the desired results from day one.

We sought validation not by email subscribers or page views, but by making sure we provide enough value so that our customers would pay us for what wasn’t even a built product, but that still delivered the desired results.

And once we saw that many of the prospects we talked with pulled out their credit card, even without us having a fancy website or a real product, we stopped worrying about our run rate and knew we were onto something.

2. They were blindsided by popular MVP methodology when they could have started with a serviced instead

When most entrepreneurs start their own business they start working on a fully scalable technology, which might take forever to build, only to find out it’s not something customers are willing to pay for.

Or they fall under the other extreme, where they do everything themselves, fully customized for each customer, and they don’t create an easy, scalable system to deliver consistent results.

The first step to building a business is a scalable model to service your customers, even without your involvement. Otherwise, you don’t have a business. You just have a glorified job.

Even before creating technology to scale your business, you can create SOPs (Standard Operating Procedures) that will make you create a unified way of dealing with tasks, and will make you see which tasks can be easily scaled with technology.

Most startups start with an MVP (Minimum Viable Product), but they forget there’s another step they can take before starting to work on the technology — the Concierge MVP.

Outsource first, insource later. Which is what Concierge MVP comes down to.

When we started SocialBee, we always had in mind a scalable model. We only agreed to do parts of the work if we thought there was a way to scale it either through technology or through procedures. Otherwise, we referred the prospects to other tools or solutions.

From the very beginning, since the team was only my cofounder and me, we started working on Standard Operating Procedures. This ensured we can both help each other in servicing the customers and that once we had enough customers and our workload exceeded our available time, we can easily hire people who would quickly become operational.

The procedures have been improved with our growth as a business. But having them from day one forced us to think in a systematic, scalable way, that served then as a solid foundation for our maturation.

Having a scalable system to service our customers also gave us the peace of mind needed to make new hires and to ensure we delivered the promised results.

How do you systemize it to outsource it to somebody else? This feels like hard work!

Most people spend lots of time doing 10-minute jobs. The average small business does 10-minute jobs hundreds of times. You need to learn to systematize yourself off out of the process in order to be able to thrive. For us, the procedures have been key to our growth.

You might also think it would only take a couple of days to scale a specific part with technology, but in the early days, there’s so much that needs to be scaled through technology, that you might not have the time or budget for those couple of days.

So leverage other existing products, APIs, and procedures to allow you to seamlessly service your customers.

3. They don’t know how to turn manual processes into automated processes

And now comes the hardest part. Once you created a reproducible system, to scale the business.

Most people who do manage to create a well-documented system can’t get to the next step — using technology to really scale the business and to greatly improve the margins.

This is because most people who think about creating systems and procedures do so because they don’t have a technical background. And most people who do have a tech background start building the tech side of the product, only to find out nobody wants to pay for what they built.

Scaling the product is when having a tech cofounder becomes invaluable.

In the absence of one, you can try to get a great CTO on board and to force yourself to think about how something could be replaced with technology.

As now you have the systems and the procedures in place, and your technology becomes more robust and scalable, now is also the time you should scale your sales and marketing efforts.

From ads to social media, to content marketing to partnerships, you have to find which mix of channels brings you most traction and to double down on them. And make sure you add SocialBee to that mix ;-)

We’re now surrounded by millions of cars. Soon we might even have flying cars. We just take cars for granted. But, of course, it was not always like this.

In the late 1800s and early 1900s each car was individually made by hand, by a small set of craftsmen. This Service made it so that each car took a long time to be built; it needed well-trained mechanics, and it cost a small fortune.

In 1908 Henry Ford started building the Ford Model T. The first car produced on an assembly line, which also made it the first affordable car.

With the Model T, Ford Scaled the automotive industry, and the roads have not been the same ever since.

Scale is the moment you get from crawl and walk, to now run. Or in Ford’s case… Drive.

With SocialBee, we created our initial system by hooking into many other existing APIs, mostly through Zapier integrations, Google sheets with well thought out formulas, and some manual work.

Even though this did work and helped us deliver results to our customers, this was clunky end very error-prone. It was something we could use internally to deliver our service, but not something our customers could easily use themselves.

The scaling step was when we started replacing the systems we created by hacking together third-party technology and building it into our core product.

In the sell and service steps, the offer is still a bit fluid, as you still try to see what features and benefits most of your customers want. By the time you reach the scale step, this should be clear and so you can create specific messaging and marketing actions around your key benefits.

Conclusion

So you see, most entrepreneurs fail to build a successful business because they start at the end. And it’s an end they envision — not necessarily what the market wants or needs.

But now you know better.

Now you know that in order to drastically improve your chances to success you have to first Sell the results so you can get real-life validation, then Service the customer to really understand the problem and to tweak your offering, and only then Scale the business, once you know your efforts won’t be in vain.

Sell →Service → Scale

The good news is that with The Alternative Startup Methodology you too can start a successful business, without needing an extensive tech background and large investments.

If you already have an idea you want to start through the Sell →Service → Scale, Alternative Startup Methodology, or if you have a struggling business you’d like to improve and want some feedback, feel free to schedule a free call with me.

If you want to learn more about this alternative startup model and what I’m up to, make sure you subscribe to my newsletter here. I’d love to know what you think about The Alternative Startup Methodology. Feel free to contact me.

And if you want to put your Social Media on Autopilot, with a focus on Growth and Engagement, make sure you check out SocialBee.io

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by 270,416+ people.

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Thanks to Niklas Göke and Franz Sauerstein

Ovi Negrean

Written by

I write about Entrepreneurship, the Alternative Startup Methodology, and building www.SocialBee.io

The Startup

Medium's largest active publication, followed by +492K people. Follow to join our community.

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