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Building a company from the ground up is no easy task. That's why most entrepreneurs make mistakes along the way, and first-time entrepreneurs make the most. 

Unfortunately for many, the failure rate is extremely high — generally 50% to 70% of small businesses fail within the first 18 months. To learn from those who've been in the trenches, we combed through a recent Quora thread that asks: "What are the most common mistakes first-time entrepreneurs make?

Below are the most helpful pieces of advice for first-time entrepreneurs: 

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egypt380If I were to describe a country where the Internet contributes as much as a percentage of GDP as its health services, education and oil industries, and is growing at nearly twice the rate as in Europe — driven in large part by growth in private and corporate-backed entrepreneurship — where would you guess?

Looking forward, if such a country has the largest population of Internet and mobile users in its region with one of the largest youth populations in the world; is a large consumer market in the early days of e-commerce; is a global tourist destination where roughly only five percent of all travel revenue is booked online — might this be an intriguing investment opportunity?

Am I describing Germany? China? Brazil?

Try Egypt.

Two years after the Arab uprisings and in the midst of wrestling significant economic and political change, the Internet is quietly and increasingly growing as a central platform of economic development around the country as it is around the globe. And according to a new Google-commissioned study by The Boston Consulting Group — Egypt at a Crossroads: How the Internet is Transforming Egypt’s Economy — policy makers, executives and investors alike are poised at a central moment of opportunity to embrace this platform for economic growth, job creation and returns.

David Dean, Senior Partner and Managing Director at the Boston Consulting Group — and one of the authors of the study — told me that this is the latest of fifteen country-wide studies his company has done, and he was impressed by what he found. “I think the biggest positive surprise was that there are many entrepreneurial companies using the Internet to grow their businesses.” The report highlights a handful of among hundreds of recent Egyptian startups as diverse as the content portal Masrawy, which now reaches over eight million unique users per month; e-commerce destination Nefsak, which offers over 25,000 products; and Alexandria’s Vimov, whose paid weather app WeatherHD was the fourth-best seller in Apple’s App store after its recent release. It notes that Vodafone, among other global investors, is making serious commitments both to the infrastructure and to funding startups in the region. “The report makes clear that there is much uptapped potential for Egypt’s nascent Internet ecosystem,” Samir El Bahaie, Google’s Head of Policy in the Middle East and North Africa, said — adding that “there is also a great opportunity for investment, economic growth and job creation waiting to be seized.”

The study underscores that the opportunity is now. Egypt’s population of 31 million Internet users is the largest in the Middle East, and while mobile penetration exceeds 100 percent in many parts of the country, the big news is that smartphones — with real computing capabilities — are expected by some to reach 50 percent penetration in the next three to five years. Unmeasured in penetration and GDP figures are what the report calls “ripple effects” on the Egyptian economy and society: The ability to reach new markets, to have better informed consumers, to have greater work efficiencies in the knowledge economy, to have simplified access to government and social services for people to take more control of their lives. Egypt, with its mobile penetration, is especially poised to capture opportunities in mobile banking (as significant success has been seen in Africa) and to fully embrace all the opportunities offered for tourism. Dean notes, in fact, that travel and tourism is “possibly the largest short-term lever that the Internet can have in the country.”

If the opportunity is now, however, so is the potential for missed opportunities. While access to the Internet is growing, there is still a lack of Internet skills in the workforce, even as compared to other emerging markets. While business adoption of the Internet as an economic platform in Egypt is competitive among larger enterprises, small- and medium-sized businesses still rank lowest among emerging growth markets. More fundamentally, there remains significant question of the most appropriate, entrepreneurship-driving policies — areas such as rule of law, copyright protection, lessening bureaucracy in starting businesses. “Of course, these are clearly not just questions for Egypt,” Dean explained to me. “What would really be encouraging would be a commitment by the Government to the Internet as an economic factor — which would mean simplifying the process for opening businesses, encouraging investment, demonstrating the benefits of the Internet in the way the government operates, and using the Internet to address some of Egypt’s most pressing problems, such as youth unemployment.”

Google hopes to play a continued role in working with governments like Egypt’s. Studies like these are extremely useful as they provide factual economic data points around the value of the Internet, El Bahaie noted. “We hope to work with the government of Egypt to leverage these data points to unlock the potential of eCommerce and mCommerce and well-informedly create a more enabling business environment for Egyptian small- and medium-sized business, and to help the country reach its full economic potential.”

Christopher M. Schroeder is a leading U.S. Internet entrepreneur and venture investor, a member of the advisory boards of the American University of Cairo School of Business, the regional entrepreneurship portal Wamda.com and incubator Oasis500. He is the author of “Startup Rising: The Entrepreneurial Revolution That’s Remaking the Middle East,” to be published September 2013 by Palgrave/MacMillan. He can be followed on Twitter @cmschroed.

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GDL Presents: Entrepreneurs on the #freeandopen web

Hear about how Google for Entrepreneurs is helping startups around the world, and what they've learned along the way about the culture of successful entrepreneurial communities.
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Columbia Business School, follies videos It’s fair to observe that many big, established organizations tend not to think or act in a very entrepreneurial way. Of course, those of you who manage large organizations (or hold their stock in your portfolio) are probably thinking, “Yes, and it’s a good thing that executives don’t behave like crazy entrepreneurs.” After all, managers of established enterprises are accountable to their shareholders, customers and employees first and foremost to successfully maintain and operate the going concern – and only secondarily to grow it and improve on it.

Indeed, Hippocrates’ famous dictum to physicians seems to apply equally well to big-company executives: “First, do no harm.”

But, fully accepting the corporation’s first priority of protecting and maintaining that which it already has, some useful wisdom is demonstrated by the behavior of entrepreneurs – wisdom that can be successfully applied to large organizations. Not only can such entrepreneurial thinking help executives run their mainstream lines of business, but also help to instill greater creativity when planning and launching new businesses or market initiatives from under the corporate umbrella.

This post provides some thoughts as to how executives can work smarter and more effectively by emulating entrepreneurs. I call these “The Seven Principles of Entrepreneurship”:

• Ski with your knees bent.
• Refine the skill of falling down.
• Get comfortable with “close enough.”
• Be happy with a “conditional yes.”
• Remember that business model innovation is often as important as tech innovation.
• Think small.
• Strive to understand and mitigate risk.

Let’s examine these principles in detail:  

Ski with your knees bent

Those of you who enjoy downhill skiing know that one of the first principles of survival is to keep your knees bent and flexible and your center of gravity low. This style enables you to adjust to change – on the slope, in surface conditions or with obstacles or other skiers – and still achieve your goal of gracefully traversing the hill. Conversely, skiing with locked knees, a rigid posture and a fixed gaze is a formula for disaster.

It’s too easy, when working in an established organization, to develop a certain rigidity in how one approaches decision-making and day-to-day operations. Most times, you can get away with it, standing upright, knees locked, eyes trained straight ahead. Why? Because established businesses necessarily develop standard operating procedures, and oftentimes little changes day-to-day. The rigidity can creep up on you. Sameness and predictability are comforting, and it’s human nature to embrace and standardize behavior that succeeded in the past.

By contrast, entrepreneurship is, metaphorically, a bit like skiing moguls (big, scary, unpredictable bumps) ... blindfolded. If you’re an entrepreneur, you have to keep your knees bent. You have to stay loose. You know full well that things will change, probably dramatically, and that you’ll experience dramatic shocks; you just don’t know exactly what those shocks will be, where they’ll come from or when they’ll occur.

Keeping loose and with a low center of gravity helps business managers absorb change and keep the business on its feet. Entrepreneurs have always operated this way as a matter of course. And this sort of flexibility and adjustability can be a crucial advantage for corporate executives as well, whether in accommodating change in existing markets or tackling new business initiatives.

Refine the skill of falling down.

To continue the skiing metaphor, one of the first things a ski instructor teaches novices is how to fall. Why? Because it’s an inevitable part of the sport, and it’s the primary way of getting hurt, but good skiers fall gracefully and bounce back quickly.

Similarly, successful entrepreneurship requires getting comfortable with the idea of falling down repeatedly and springing back up each time. Startup business is all about expecting, gracefully accommodating and learning from failure. After all, even with the best-thought-through venture, it’s reasonable to expect that 50 percent of the original business plan will prove to be wrong. Worse yet, you won’t know which 50 percent until you get into it – until you point your skis down the hill and go.

Understanding this phenomenon is why venture investors often prefer to invest in entrepreneurs who’ve experienced failure. It’s also why many startups prefer to hire, as key managers, individuals who have experienced the good and the bad of a previous startup or two. A previous fall or two is not considered a scarlet letter of failure on a person’s career, but rather an indication of maturity and a willingness to take calculated risks.

For established organizations to successfully grow through innovation, they must delve into less certain and more ambiguous environments. Therefore, they need to take more calculated risks without being paralyzed by fear of failure. They need to refine the skill of falling down.

Get comfortable with “close enough.”

The vast majority of corporate innovations never see the light of day because they’re “killed in committee.” Why do so many die that way? Because innovative ventures and business initiatives almost always have too many unknowns for many people’s comfort, and the powers that be in established companies – often groups or committees – possess the power to say “No” based on that uncertainty. Just as, in the old days, IT executives knew they’d never get fired by buying IBM, with corporate innovation it’s nearly always a safer bet to say “No” to something new.

Meanwhile, successful entrepreneurship – or corporate venturing and new-business-development – requires operating in a highly uncertain, ambiguous environment. It’s a bit like trying to solve an algebraic equation with seven variables and six unknowns. Technically, it can’t be done, so the “correct” answer is, “We can’t do it.” The equation can’t be solved without taking intelligent guesses and trying out different combinations based on inadequate information, approximations and instinct.

But the perfect is often the enemy of the good. Remember, in entrepreneurship: The best decision is the perfect decision (which you’ll never have sufficient information or time to divine). The next best decision is “close enough” and get moving – you can always adjust course as you go (i.e., ski with your knees bent). And the worst decision of all is to continue to study, or form a committee (which so often translates to the “safe no,” and therefore doing nothing).

The entrepreneurial approach accepts “close enough”: Roll up your sleeves and work with customers from the start. Get something in customers’ hands, even if it’s not finished. Experiment, and don’t be afraid to adjust, occasionally fall down and get back up. Do it, try it, fix it ... and repeat.

Be happy with a “conditional yes.”

The tendency in big organizations is to seek budget approval for an entire multiyear project upfront. After all, nobody wants to launch into building, say, a $275-million plant when they only have corporate funding approved for the first $30 million for planning and site prep.

The problem is when we see corporate new-business-development folks trying to apply this upfront approval formula to venturing.

In the entrepreneurial world, nobody expects to receive 100 percent funding upfront; it just doesn’t work that way. With independent ventures, investors believe in “milestone investing,” progressively meting out capital sufficient to fund the next 9 to 18 months of activity and the achievement of the next crucial value-building milestones. For instance, it’s not uncommon for a venture requiring a total of $15 million in investment capital in order to reach self-sustaining profitability to seek seed funding of only a million dollars or less to build a prototype and do some preliminary testing. A subsequent “A” round may be for just a few million dollars to enable the venture to build a team, productize the technology and sign up the first few customers. And so on. Typically, early-stage investors are keenly interested in continuing to participate in subsequent rounds; they just like to see incremental progress along the way.

Internal corporate ventures – and here we’re referring to risky ones entailing new technologies, new business models and/or new markets, not capacity-expansion projects and the like – should approach funding with the same venture-funding mentality. Remember the principle we mentioned in our last issue: that 50 percent of a new venture’s business plan will inevitably prove to be wrong, you just don’t know which 50. If that holds true, it only makes sense for the parent company (playing the role of venture capitalist) and the internal startup team to agree on funding increments and associated milestones rather than the all-in approach. Less capital is committed, inevitable mistakes or discoveries are less costly and more easily accommodated, and the new business remains nimble.

Remember that business model innovation is often as important as tech innovation.

We’ve never seen any statistics or studies in this regard, but it sure seems that the majority of shareholder value created over the last half century had a lot more to do with companies innovating around their business model than around technology. Think of eBay with online auctions. Store brands and generic drugs. Amazon cutting out the retail middleman. Manufacturers asking suppliers to co-locate. Dell building PCs to order. Social networking typified by sites such as MySpace and Facebook. The way HMOs and PPOs fused insurance and healthcare delivery. Sure, in many cases, technology was involved, but technology was not the strategic driver that created shareholder value. Instead, it was creativity applied to the business model (product/service mix, value proposition, channels, pricing) that made the difference. This kind of thinking needs to be applied not only by entrepreneurs but by corporate new-business professionals as well.

Think small.

An executive in a tech startup, recently hired away from a Fortune 500 company, unfortunately brought his big-company thinking with him. Inheriting management responsibility for a professional services operation of about 50 people growing at over 50 percent annually, he saw a crying need for more coherent project management. His solution? Call in the vendor who’d provided similar software and services to his last employer, and get a quote. The result? A half-million-dollar expense where cloud- or PC-based project management software and rigorous management communication would have sufficed nicely; worse yet, the expensive “solution” never worked. The manager was fired and the system scrapped for a simpler approach.

Too often, we see established organizations trying to innovate and getting caught in this big-company, go-big-or-go-home mentality. I observed one internal corporate venture of a multinational tech company spend millions on PR – because “That’s how we do things at XYZ Corp.” – before they’d even fully defined their product, value proposition, positioning and go-to-market strategy. Bizarre. Entrepreneurship, even if it’s taking place under the corporate umbrella, calls for small, inexpensive, rapid-turnaround experiments and trials. “Thinking small” doesn’t mean that you don’t have big aspirations for your new venture. (Indeed, I tend not to think of startup ventures as small businesses; we think of them as global enterprises that happen to be young.) But by iteratively discovering what works and what doesn’t, you’d be surprised how far you can get on how little capital.

Strive to understand and mitigate risk.

Contrary to popular belief, entrepreneurs and venture investors are not risk-seeking nuts, the business equivalent of helmet-free bungee jumpers. In fact, the best ones are remarkably risk-averse, skilled at identifying and mitigating venture risk. Whether they do it intuitively or explicitly, A-list venture folks are constantly working to wring risk – whether it’s product risk or risk of a market, financial or management nature – out of their startups. There’s a method to their madness that corporate startups need to apply.

“The Seven Principles of Entrepreneurship” are enumerated here to stimulate and challenge the thinking of corporate managers. In many cases, entrepreneurial behaviors that may, on the surface, seem to be inappropriately risky turn out, on closer examination, to be worth emulating if done in a thoughtful manner. And emulating certain entrepreneurial behavior can help corporate executives excel, particularly when it comes to launching new initiatives or product lines, trying out new business models or entering new markets. 

This note was prepared by James D. Price, Adjunct Lecturer of Entrepreneurial Studies at the Ross School of Business at The University of Michigan. ©2012, James D. Price.  

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prepared

The only way to secure your financial future is to work for yourself.

At least that's what Scott Gerber, author of Never Get A Real Job. thinks.

"Now, more than ever, you need to be entrepreneurial to be successful; you need to create a job to keep a job," says Gerber.

"When you work for someone else you're putting all your eggs into one basket. If you want to secure your financial future regardless of the bad economy, you need to be in control of your own life," he insists.

Ready to take a stab at entrepreneurship?

1. Get your ego in check

"You can't build a successful business if you don't have your priorities straight and ego in check," says Gerber.

While entrepreneurs should be confident, if you go overboard you'll get in your own way.

2. Keep your idea simple

"If your idea is not simple, you're stupid," says Gerber. "Build a business that is nuts and bolts practical and not complex." 

"Create a simplified product or service that sells X product to Y customer for Z profit," he says.

3. Always be prepared for the worst

"Every decision should be thought through; plan for the worst so you're not caught off guard if it happens," says Gerber.

"Come up with three alternatives for every decision so you've taken all outcomes into consideration," he suggests.

See the rest of the story at Business Insider

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