A New York Times article lists the top rookie mistakes entrepreneurs often make when starting a business, and with our years of experience in helping entrepreneurs capitalize on new business opportunities, many of them ring true. Here’s the list:
- Hiring a good friend or family member. When it comes to hiring staff for your new business, competence is the most important attribute, not familiarity.
- Keeping rent as low as possible. While managing expenses is always an important part of new business start-up, choosing a location purely based on cost can be deadly for a business. Choose a location that provides the best opportunity to generate customers.
- Buying used equipment. Sometimes this works out all right, but more often than not, you will spend more money fixing used equipment than you would have spend buying new. Plus, it’s an added distraction that doesn’t contribute to sales.
- Underpricing. You need to price your product to make money, which is the reason you’re in business in the first place. It starts with knowing what you need to earn and pricing in alignment with your minimum to be happy first and then increasing from there, once you clearly understand the value of your product to the marketplace.
- Not spending on professional advice. There is nothing more expensive than a cheap lawyer or CPA. Seek out – and pay a reasonable fee—for the best possible legal and financial advice, not just for one-time, but for an ongoing relationship you can count on. Legal and financial guidance should be a regular part of your monthly work on your business, not something you do when you think about it.
- Using your personal bank for business banking. Not every bank knows how to serve the small business customer (which means lending). If you’ve chosen a good accountant (see above), he or she can guide you to good SMB banks in your area.
- Borrowing blindly. Sometimes using borrowed money is a good idea – like borrowing to do things right — and sometimes it is not. You need to know the difference.
- Not measuring your marketing. You need to implement a tracking system that measures your marketing efforts; otherwise, you may be just throwing money at something that doesn’t bring customers in the door.
- Treating employees too fairly. Obviously, you need to treat your employees fairly. But don’t compound a hiring mistake with months of indecision – your business and your profits will suffer. Contact us to review your hiring and firing practices.
- Falling in love with your product or service. A wonderful product or service won’t make up for bad operational decisions. It’s key to have a balance of both — a product/service you love and an operational team to support it.
We can help you discover if you have what it takes to start your own business and guide you through the steps to successful entrepreneurship. Whether you are new to entrepreneurship or already operating a business, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.