Starting and running a small business is hard, risky work. According to the SBA, approximately 550,000 new businesses were started in the United States in 2009. Within two years, 30 percent will have failed. Half will be gone within five years. Only one in three will survive to celebrate their 10 year anniversary.
In this Internet era, the speed of business is accelerating, the competition is global, and customers demand more than ever. As a result, business owners have a smaller margin for error.
During my career as a serial entrepreneur, I've made my share of stupid mistakes (and will probably continue to do so). In spite of the inevitability of screw-ups, I take the time to analyze each one and figure out what I should have done differently. The introspection is much more painful and not nearly as fun as celebrating a success. But the old cliché is true: I learn more from my failures than from my successes.
Check out some of the most egregious mistakes new -- and even some experienced -- business owners make, and leave your suggestions for other business mistakes I may have missed in the Comments section.
|
Hey, It Happens...
Dumb As Rocks
|
Follow Christopher Hytry Derrington on Twitter: www.twitter.com/chrisruralamer
|
Post a Comment
And businesses started by women succeed twice as often as businesses started by men.
So, this misogynistic inability of male "leaders" to evaluate anything with their brains rather than their penises makes them twice as likely to fail.
That's right: FAIL. Men FAIL in business at TWICE the rate of women.
"Nowadays, when I start a new company or product expansion, I assume no one will want to buy without my personal involvement in the sales and marketing process."
We all sell all the time. With your own business it is necessary to develop a formal process and practice, get training to improve your results.
http://www.sales-training-for-business.com/index.html
When you are developing a highly technological product that requires hundreds of thousands of dollars invested up-front just to create the prototype, you don't have a positive cash flow for a long, long time.
The advice given here is probably best for people pursuing a shopkeeper business model. It needs to be modified for high-tech.
But three years of negative cash flow is not unprecedented out here. In fact, it might even be three years before you encounter your first customer.
I'll keep your advice about the management team, letters of intent, and strategic partnerships in mind, though. You didn't mention those issues on your list of ten most common startup mistakes -- probably because they don't apply to everyone. Thanks.
http:// smartstartup.typepad.com/my_weblog/2010/11/how-to-raise-startup-capital-or-not.html
I also think slide 10 is important--long hours don't guarantee success if your activity is not generating positive results for the business. Soliciting feedback from people you respect is crucial and helps you avoid the "not seeing the forest for the trees" syndrome.
Great info Chris.
pleaseforce has it exactly right.
why should anyone else take a leap of faith by backing you or joining in to help when you yourself haven't exhibited that faith?
and sorry, you can't devote 80hrs(+) to your new venture (#3) while keeping a 40hr(+) "day job" — not for more than about a week, without jeopardizing your health *and* both jobs.
the rest of it is well-observed.
It will be very easy to raise finance later on when your accounts show that your business has become self-supporting, without the help of any large bank loans.
And by the way ... I =don't= mean that in the way that you might think!
... nor do I mean it =that= way, either!
... nope, nor =that= way!
If you ever do start your own business, you will realize precisely why "the organization that you left behind" was built and was run in the way that it was. Why it more-or-less HAD TO BE run in the way that it was. And, why YOUR new company (gasp!) will ... have to be run in much the same way.
This perspective is one that's fairly impossible to explain. Those of you out there who run (or who have run) your own business, are nodding your heads vigorously. Those of you who have not (yet...) are staring at me as though I =must= be "the pointy-haired boss" from the comic-strip, "Dilbert."
Being "a successful entrepreneur" DOESN'T mean that "you become rich." :-O But it /does/ mean that, for the rest of your life, you will understand where a paycheck actually comes from. You will never again take it for granted. Even if you elect to go back into the world of full-time employment for "somebody else's company," you will never look at your boss(es) the same way again.
And =that= ... is "priceless."
The way business is done in this country is the reason why we're losing ground in virtually every sector there is. Our business schools are putting out students who can't read (or write, or even grasp basic critical thinking skills), who are studying all the same textbooks and all listening to the latest flavor-of-the-month business gurus with the same stale ideas which are just a re-written re-hash of what was popular two years ago.
There are tried and true methods for business that always work: embracing change rather than trying to avoid it; building a sales force that relies on relational sales rather than quick transactional sales where your client has more in common with someone in line at a McDonalds than someone who can help grow your business, and listening to the people who actually talk to the client base every day, rather than an accountant whose only contact with a client is endorsing and recording their check before deposit.
I think American business is sick, and if every entrepreneur tries to do it the way it was done by the first person they ever worked for, it'll never get healthy.
Journalists know what they're doing, too. The dream of being a successful entrepreneur rates second only to the dream of being a freelance writer ... which is supposed to consist of padding around your house all day in your underwear and booties.
Yes, writers keep re-hashing the same books, because they keep selling. But you are selling "the dream of not-being where you are," not the dream of "successfully being somewhere else, successfully doing something else." There are always discontented people who think that their jobs suck, and most jobs do suck, even if they're a job of your own making. (Remember that.)
There are two ways to make a go of a business: (1) put a little money into a lot of things, taking a small profit from each one; or (2) put a lot of money into a few things, building up a "relationship" as you call it, in order to get a much bigger profit from each one. Option (1) is much less risky and easier to scale-up, which is why there is no salesman handing you a box of cereal, nor a station-attendant pumping your gas. "Loners" tend to pursue option (2) because, well, "there's only one of Me." But, if the gold isn't there, all you've got is a hole in the ground.