18-07-2025
Harvard Business School lecturer: These 2 big mistakes can tank your business idea—a lot of people make them
Two mistakes can doom any new business — and many people make them, says Julia Austin.
The first mistake: not doing enough research to make sure there's a viable market for whatever you want to sell, says Austin, a senior lecturer on startup operations at Harvard Business School. Having a great idea isn't enough to start making money, she says — particularly if you want to go beyond the world of side hustles and build a startup that lasts.
Relatedly, the second mistake entrepreneurs tend to make is failing to lay the groundwork early for an effective corporate infrastructure. You might find it boring, but turning a great idea into an actual business means "building a whole company," says Austin, a former executive at successful companies like VMware and Akamai Technologies who also now works as an executive coach.
Austin works with "a lot of founders who say: 'I never imagined I'd be spending this much time on people stuff,'" she says. "And [that's] not just hiring, but managing people and building teams and all the things that come into play with running a business. So, they get kind of caught up in the idea [at the heart of the business] and lose sight of that."
Both mistakes are typically the result of over-exuberance from first-time entrepreneurs who are very excited about their idea, says Austin, the author of "After the Idea: What It Really Takes to Create and Scale a Startup," which published on June 10.
Here's her advice for avoiding them:
Business ideas often start with a simple question: How do I solve this problem I'm experiencing in my own life?
A lot of would-be entrepreneurs incorrectly assume that their problem is shared by enough other people to turn their solution into a viable business, Austin says. You might fall so "in love with the solution" that you "lose sight of where the problem is," she notes.
"I'm a big believer in: 'Great. You've got the inspiration, but really make sure you understand the problem,'" says Austin. "You might have your version of the problem, but how do you expand that into something that a broader audience would be interested in? And who are they?"
Seek feedback from a diverse set of voices outside your immediate circles, Austin recommends. And don't base your decisions off preliminary research or shallow evidence, like a social media post that gets decent traction, Austin adds. Instead, you might try "[conducting] ethnographic research, simulating a solution [or] actually building a [product] and spending time with the prospective user," she says.
Austin's suggestions echo similar comments from serial entrepreneur and Stanford University adjunct professor Steve Blank. Launching an exciting business idea without researching the market beforehand can be a "fatal mistake" that he's seen "a million times," he told CNBC Make It on March 24.
"The most important [question] is: 'Well, who are my customers?' And the second one is: 'What do they want?'" said Blank. "It's not: 'Here's what I'm building. Can I sell it to someone?'"
Down the road, if your business grows enough, you might need to start hiring employees. When the time comes, don't just start hiring — do some prep work first, says Austin.
Start by taking the time to draft an overarching "organizational strategy," where you define what type of company culture you want to create and the employees you'll need to cultivate it as the company grows, she says.
In her book, Austin recommends imagining your business six to 12 months in the future, including revenue goals and the types of products you want to be selling. Think about how many customers you'll need to make those goals realistic, and how many employees across various roles you'll need to meet those customers' needs.
From there, you can sketch out an organizational chart to determine how many people you should hire and for which roles. Young businesses that hire too many, or too few, employees can face either a budget crunch or worker burnout, and hiring for the wrong roles can create gaps in the company infrastructure that make it harder to grow down the road, Austin says.
"The recalibration to fix these disparities later is time consuming and can impact your company culture, so do you best to stay ahead of this," Austin wrote in her book.
Prep work can be boring, especially when you're bringing in more and more revenue each month, and you're worried that someone else might see and copy your idea at greater scale, wrote Austin. But before you get to the stage where you can move quickly, you need to build a solid infrastructure for your business — otherwise, you'll likely "fail fast," Austin says. Her mantra: "Move slow to go fast."
"Remember, Google was not the first internet search tool, and Facebook was not the first social media app," says Austin. "It's all about execution (and a little bit of luck and timing)!"
