The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some common mistakes young entrepreneurs make?” is written by Andrew Filev, founder and CEO of Wrike.
This may sound weird, but Ewan McGregor helped save my business. I’ve never met him, and he’s never been involved with my company. But when you’re a first-time entrepreneur, you never know where you’ll find an “aha” moment that brings a mistake into the light.
Many years ago, I was pumping money into search-engine marketing to sustain our momentum. It was working decently, but it was costly. My gut said to dial it down, but I couldn’t bring myself to risk slowing our growth, even though the mounting cost was making me sweat. Enter Ewan McGregor.
One night I chanced upon a movie called Rogue Trader, in which McGregor plays a banker who brings down Britain’s largest bank. He had chances to cut his losses, but instead he kept spending and spending his way to an eventual disaster. It hit close to home. The next day I slashed the SEM budget, and a few weeks later, we were getting better results for half the cost. It turns out that constraints can breed ingenuity.
If your gut and your data are telling you the same thing, it’s time to listen. Don’t let burning all your cash be the thing that brings you down.
Along the way, I’ve learned some other important lessons as an entrepreneur through trial and error:
Test your hypothesis
For me, building the product is the most fun part of the business. It’s fun to be an inventor, but don’t forget to test business models as you build. In ecommerce businesses, for example, you can test click rates and visitor cost before you build your minimally viable product (MVP).
By the time you’re ready to launch the product, you should have a sense of the best ways to sell it. This will continually evolve, but testing the strategy upfront will reduce your time-to-revenue in the market.
Listen closely to your customers
It’s easy to get so caught up in your vision of the future and your everyday demands that you lose touch with your customers. Surprisingly, this is more common than you might think. I have seen entrepreneurs get so deep into product details that they make the mistake of forgetting to involve customers. The sooner you move beyond theory and code, and talk with the real people who buy what you sell, the better. Their needs will guide your next steps in strategy and development. If you don’t stay close to them, it’s very easy to lose direction or indulge in pet projects that don’t truly connect with customers.
When I first launched Wrike, I answered customer support emails myself. And while the trend in SaaS was moving toward wiki-style support forums, I offered phone support, even to our free users. This had the unexpected side effect of allowing me to identify patterns in customer feedback very early on, which helped us steer toward product-market fit faster. I can look back at those conversations and see how they shaped our direction as a company. So go on sales calls, form an advisory board of target buyers or take your customers out for dinner and listen, listen, listen.
Fast growth isn’t always the right growth
A time may come when the promise of fast results tempts you toward a sales channel that’s outside of your core business. Diversifying can be easier for larger companies, but for small teams, it can take away vital resources from your primary goals. Partnering with another company to access their customers seems logical, but it’s a mistake to invest heavily in something that harms your ability to stand on your own in the long term.
We once integrated Wrike with a channel that had about 40 million regular users and it brought us zero new paying customers. In hindsight, it was too consumer oriented for us, but “40 million users” was a big carrot. If you do get offers to pursue channel partnerships, make sure you understand the customers who use them before diverting attention from your primary roadmap.
Mistakes are part of the process of building something new, and we must acknowledge them, learn from them, and go back to work. I hope reading about mine will help you save some time and money. As a first-time entrepreneur, you’ll find those are very precious commodities.