With tournament heavyweights Kaizer Chiefs, Orlando Pirates and Mamelodi Sundowns already out of the competition, Usuthu would have backed themselves to at least reach the semifinals after being drawn against second-tier side Casric Stars.
However, Zwane conceded that his players may have taken their opponents too lightly, resulting in their 2-1 defeat inside extra-time at Moses Mabhida Stadium.
"It'a a big miss but I always say, I'd rather play a PSL team than a First Division team, especially after playing against two PSL teams that have been very difficult to beat," said Zwane.
"And once you're up against a lower division team, who also eliminated Orlando Pirates, some of our players probably thought, 'Hayi, this one, if we can beat Richards Bay or Polokwane City away from home, they are coming us, we are going to the semifinals.'
"And that's where the danger lies because you win the game before it even starts – why? Because of the experience, most of our boys have never been in this situation, they're thinking things will become easy and just happen. Unfortunately this was a big wake-up call."
Zwane added that winning a trophy would have been evidence that the club's project is on the right track, but defeat now suggests otherwise.
"We desperately needed [to win] this game, for many reasons – building the team, the belief and changing the mentality, and seeing how they can cope when the going gets tough," he added.
"Trust me, it shows that we are not ready because we had no business losing this game, to be quite honest, even in extra-time, we just had no business.
"So it's all up to us now to put all our eggs in one basket and just go all out and win most of the remaining games just to finish in a respectable position, which is nothing less than number three."