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|16 deadly startup business blunders||Views: 1142|
|Aug 20, 2008 1:00 pm||16 deadly startup business blunders||#|
|Every person who works for someone else in today’s business world dreams about someday owning their own business. This so-called “entrepreneurial itch” peaks during times of job-stress or unexpected home pressures that help make up the adventure that we call life. Recent studies show that 50% workers are “unhappy” in their current job and long for a business to call their own.|
The passion to start a business on your own is tempered by the natural fear factor of failure which grips the mind of every would-be entrepreneur. Nobody likes to fail ……….and fail you will if you don’t properly plan your escape route from your “employee prison”.
After working with thousands of businesses over more than 30 years, I have identified what I call the “sweet sixteen” most common blunders made by entrepreneurs in starting their own businesses.
Avoid these blunders, beat the odds, and go live your dream:
Blunder # 1: Choosing a type of Business that you do not Truly Like – but others make money in it. This is actually a lot more important than running out of money.
Blunder # 2: Failure to find your Niche (eg: Selling an identical product or service that the large chain stores sell)
Blunder # 3: Underestimating the initial total Capital Investment required to get the
business off the ground
Blunder # 4: Failure to have a Realistic Written Business Plan drawn up at startup with realistic sales projections.
Blunder # 5: Failure to set up a Workable Referral Network prior to opening the business- a free sales force for your business
Blunder # 6: Under-Pricing your product or service
Blunder # 7: Lack of Outsourcing of some business functions to others…hire a clone quick!
Blunder # 8: Misclassifying Employees as Subcontractors
Blunder # 9: Insufficient time and funds spent on Marketing & Selling your product or service
Blunder # 10: Under-Insuring and/or failure to incorporate or set up a LLC entity structure
Blunder # 11: Physically Over-working- the all work / no play concept
Blunder # 12: Failure to inform people who care about you that your work hours and work habits will drastically change and obtaining their acceptance of the situation
Blunder # 13: Spending too much on Equipment & Overhead
Blunder # 14: Lack of knowledge of tax laws & local regulations
Blunder #15: Extending too much credit to customers
Blunder # 16: Lack of adequate Research of the industry and marketplace before starting up
Avoid as many of these blunders as possible and remember to keep your hands out of your wallet until you finish all your homework. Then go out, take a deep breath, and show the world that you made the right choice!
Private Reply to Earl Sigmund
|Aug 22, 2008 2:40 pm||re: 16 deadly startup business blunders||#|
|I think you're missing the most important "blunder" - the #1 reason why small businesses fail:|
Failure to understand Cash Flow.
Urban Village Scooters
Private Reply to Kurt Schweitzer
|Aug 22, 2008 3:28 pm||re: re: 16 deadly startup business blunders||#|
|I believe Earl did cover about the cashflow...in blunders nos 3,9,13 and 15.|
It would be interesting to know what would be the top 3 blunders.
Care to share?
Just indicate the blunder nos and I will tally them up at the end of next week.
Private Reply to Philip Ang
|Aug 22, 2008 9:31 pm||re: re: re: 16 deadly startup business blunders||#|
While No.s 3 (Underestimating the initial total Capital Investment required to get the business off the ground), 9 (Insufficient time and funds spent on Marketing & Selling your product or service), 13 (Spending too much on Equipment & Overhead), and 15 (Extending too much credit to customers) may contribute to poor cash flow, they are not what I meant.
Understanding Cash Flow means understanding the time aspects of the CASH in your business.
For example, suppose a customer uses a credit card to purchase something from you. That transaction is income today, but won't result in CASH in your checking account for 2, 3, or more days later.
Another example: Suppose you sell things on layaway. The deposit that the customer gives you is CASH today, but doesn't translate to income until the final payment is received and the purchase is finalized.
A third example (one that has really bitten me more than once!): Suppose you place an order for several items with one of your suppliers. You use your debit card to pay for it. Most of the items ship, but one is placed on backorder.
In this case the expense is incurred when you place the order, but the CASH doesn't come out of your account until the items are shipped. The worst part is that the backordered items may not be shipped for several months, and THEN the cash is pulled out of your account. Did you remember that that cash wasn't really there, or did you spend it on something else?
The cash flow challenge can be boiled down to having sufficient cash reserves to cover your daily needs, while simultaneously minimizing those reserves so that your money is working as hard for you as possible.
This is the number one issue that sinks small businesses.
Urban Village Scooters
Private Reply to Kurt Schweitzer
|Aug 23, 2008 1:14 am||re: re: re: re: 16 deadly startup business blunders||#|
|I agree wholeheartedly Kurt. That's why my editors were so keen to publish my book Small Business Cash Flow a couple years ago.|
It is THE most critical element of business success.
What are others thoughts about this?
MYOB Network Leader
Follow me on Twitter: twitter.com/deniseoberry
Private Reply to Denise O'Berry
|Aug 25, 2008 2:46 pm||re: re: re: re: re: 16 deadly startup business blunders||#|
|"Blunder # 4: Failure to have a Realistic Written Business Plan drawn up at startup with realistic sales projections. "|
Or worse no focus with in that plan on how you will assert projections by meeting success goals for clients / customers, many Biz plan miss that primary objective IMO anyway.
Small Business Think Tank Owner http://thinktank-network.ryze.com/
Private Reply to Kathy Buck