This is an excerpt from Top Ten Lies Of Entrepreneurs by Guy Kawasaki, CEO of Garage Technology Ventures:
The 10 Lies of Entrepreneurs:
1. "Our projection is Conservative"
All entrepreneurs when presenting their Cash Flows state that the estimates are always below what they should be.
When I see and evaluate a project, I always take 20% of the sales estimates and increase the costs and investments by 20%, only then do I begin to analyze the financial indicators. I never keep what they present.
2. "Garner indicates that our target market will be USD 50 MM for 2005."
The revenue estimates are generally the most inflated, so that EBITDA is considerably higher. The same will happen with the NOF (Operating Needs of Funds) since a market like that and a relatively short cash flow, will substantially improve the results before taxes.
3. "Boeing will sign our contract the following week."
When you inquire about sales, they have none, but they do have millions within the "next few months." As a former boss of mine said, "only with a contract in hand, a business is closed, never before."
4. "Key employees will join as soon as we are founded."
That means they don't have them, they have to be hired, trained and all. Be careful, the teams are there or not, there is no such thing as "already being".
5. "No one else has done what we do"
This I think is the most recurrent lie of all, but here you hear "my project has no competition or substitutes, we are unique."
6. "Several firms are doing the Due Diligence"
They say that so that one believes that someone is indeed interested in them, but hopefully they come with an interested party who hardly allocates the time and resources to analyze their initiatives.
7. "Oracle is too slow to be a threat"
The typical appreciation and undervaluation and almost "contempt" for what exists, in terms of competitors. They usually tend to discredit their adversaries, lowering their profile as if it were so easy to improve what they have developed.
8. "Pages will pay to use our software"
9. "Patents will make our business defensible"
Without prejudice to the value of patents, it is usually argued against the inexistence or lack of creativity to raise entry barriers.
10. "All we have to do is reach 1% of the market"
The first paradigm of entrepreneurs is that for "all their projects" the market exceeds 100 million clients, therefore, with 1% they hold up to the best of financial scenarios. It is the typical argument: how are we not going to be able to have even 1% of the market?
