6-10 Stupid Mistakes That Many Small Business Start-ups Make

Terry Kyle · #1 (**permalink**) 09-07-2008, 15:57

6-10 Really Stupid Mistakes That Many Small Business Entrepreneurs & Start-ups Make
by Terry Kyle

6. Persisting with a formula that isn’t working for too long.

Despite the fact that persistence is vital to small business success, it can be similarly important to know when something isn’t working and isn’t going to work.

This is one of the most painful and difficult lessons to learn in small business.

No matter how much we may believe in the idea/product/service, if the evidence is to the contrary, then it probably isn’t going to work in its current form.

In such cases, give it a short, finite period, then move on. Persisting with failing advertising is one such act of financial suicide.

Many years ago, I started an English tuition small business, Oxford Home Tuition, in Sydney and found that a $50, two-week, fine-tuned classified ad in a select group of local community newspapers at the beginning of the school year delivered more work for that entire year than could possibly be fulfilled - all at $50 an hour!

With advertising and marketing materials, constant experimentation, fine-tuning and monitoring is essential.

Similarly, avoid expensive advertising like perceived competitors – they may be clueless too - and try to have your ad situated on the right-hand side of magazines or local newspapers.

Left-hand placement response is much lower. Success is what you should be attached to, not a particular idea.

When you move on though, try to understand why it didn’t work and add this to your own knowledge base.

Many successful entrepreneurs endured failures before eventually learning how to succeed.

We can all learn from that.

7. Lack of financial resources for the project at hand.

There is a world of difference between not having enough money to start a small business and not having enough money to start a particular small business.

Many small businesses can be started with virtually no money and even as an operation parallel to a regular job while it’s getting going.

However, trying to start up certain types of small business without enough capital is a certain recipe for failure.

This is especially true of small businesses that charge on an account basis and will not see any cash flow from clients for at least 30 days (more like 60-120 days in many cases, if ever).

If a business has salaries, rent and utilities to pay in the interim, there had better be plenty in the bank or a huge overdraft on hand (which adds interest costs to the business).

8. ‘Head in the sand’ principle.

Being in business - being alive even - means hearing bad news.

Often.

Something, somewhere, somebody always screws up and it’s going to cost you financially.

How should these problems always be dealt with?

Head on.

Talk to creditors.

Talk to the clients you still have.

Talk to suppliers.

Talk to staff - especially about ideas to reduce overheads and increase sales.

Keep all problems acknowledged and understood. Denying problems and running away gives them the power.

Take back that power for yourself.

Ultimately, no problem in the world is worth more than your dignity, enjoyment of life and relationships, so treat them accordingly.

9. Failure to crunch the numbers on everything.

It’s like the old expression: count the cents and the dollars will look after themselves.

If you need a car for business, does it have to be a new one? Three-year-old cars that are barely run in are usually close to half the price of the new models!

Anti-investments (cars, computers, office equipment, furniture) should have a minimum of expenditure whereas investments (shares, property) should have the opposite.

Funny how most of us ignore this basic financial principle and are continually broke. Good tax advice is also critical here.

Where possible, always try to run your small business/es from home - it saves a fortune. If you think that £200 per week office rent sounds reasonable, that’s £10,000 a year that the owner of that office will get before you.

And precisely how much bottom-line business will it actually add?

Try to factor all expenses over a monthly and yearly cycle - it gives them a much more realistic perspective.

When dealing with advertising representatives from media publications, be extremely firm, stick to an agreed budget before hand and become a black belt at saying ‘NO’.

Insist on never paying the full advertising rate – it’s an excellent starting point to begin negotiations. Variations in advertising rates are staggering and good hagglers constantly save thousands.

10. Giving up.

Don’t give up.

If you’re not succeeding, there are probably sound commercial reasons for it.

It has nothing to do with you as a person.

Your commercial ‘pitch’ [or specific product/s] just needs to change.

Talk to a mentor. Talk to people in the business. Talk to your accountant. Even better, talk to your customers.

Quitting usually means becoming a ‘slave monkey’ in somebody else’s circus.

Try, re-calibrate with external input and then try again.

The only thing that should stop us from continually trying is a pine box.

Goethe, the famous German writer and philosopher, who many incredibly smart people regarded as the smartest man who ever lived, believed that in life, only one thing mattered: striving.