Three Mistakes Made by New Entrepreneurs: Rules of FlatClub

The CEO of startup FlatClub shares the three biggest mistakes made by new entrepreneurs.

As an entrepreneur, I often make mistakes. In fact, running your own business is pretty much synonymous with making (occasional) mistakes! For new entrepreneurs or businesses, making mistakes is an essential part of the learning and growing process. Of course, my MBA helped to prevent quite a few mistakes, but nonetheless some just come with the territory of being new entrepreneurs and taking decisions.

Here are a few of my biggest mistakes when starting FlatClub. The new entrepreneurs among you can identify where I went wrong while starting up and then perhaps avoid doing what I did and make your own mistakes instead!

1. Growing FlatClub too quickly

When launching FlatClub, a platform to book short-term accommodation within trusted networks, I was tempted to grow margins by offering additional services for guests and hosts. Growing margins sounds like a great idea (especially for MBAs), but it has a price. This shifted my focus from providing a great experience when booking a flat or a room for short stay into trying to do too many things at the same time, with very limited resources. Limited resources are a part of life for a startup, so make sure you know your limitations, and focus only on what creates value to customers and (future) investors.

2. Getting bogged down in bureaucratic red tape

At FlatClub, bureaucratic red tape was an obstacle. Legal forms, tax forms, terms & conditions, accounting, etc. take a long time to set up properly, but they’re worth nothing if the business doesn’t work. Instead of devoting a lot of time on cutting through bureaucratic red tape, do the minimum, and focus on getting customers. At some stage, I realized that I might have the most efficient tax structure, but if I don’t make revenue, it doesn’t really matter. Hence, I changed the approach – I do only what is urgent, and when the big investors come in, they’ll sort out everything else – and that’s actually what happened. Investors care about traction, growth, and customer feedback – not about legal structure.

3. Not taking customer feedback

As FlatClub grew, we built an outstanding team of 12, of 10 different nationalities. But it was at this stage that I realized that I didn’t have direct access to customers, and couldn’t get customer feedback on their needs and pains in order to improve the service, operations, and marketing of FlatClub. I decided to dedicate time for direct customer service by operating our live chat, and I take the Sunday night shifts every week so I can speak to FlatClub members and get direct customer feedback. The extra benefit is that customers love chatting to the CEO.

Those are the three biggest mistakes I made. But I believe the biggest mistake made by new entrepreneurs is stopping getting their hands dirty. New entrepreneurs can learn a lot from their business school network, but you’ll learn the most by getting in there and doing things – even if that means the occasional mistake!

About Nitzan Yudan

Nitzan Yudan, 33 years old, lives in London, graduated with an MBA at London Business School, and has 12 years’ experience in finance, IT, and tourism. Nitzan is the founder of Flat-Club – short term renting within social networks. Flat-Club helps alumni and students of top universities find short term accommodation (from 1 night up to 6 months) with others they trust from their existing networks Flat-Club was founded in November 2010 with 5 flats in London and within its first year grew to 2,000 rooms and apartments in 20 cities and a team of 15 from 12 nationalities as part of the London Business School Incubator.