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A recent SCORE discussion with business expert Steve Strauss revealed the biggest startup mistakes to should avoid. Here is his list, with his comments first in italics, then my comments.
Answer:
1. Taking on too much debt:
Most entrepreneurs have to take on some debt to fund the dream. That is expected and fine. But you simply must 1) keep that indebtedness to a minimum, and 2) have a plan for paying it back from the get-go.
It will take a while for that new business to begin to generate revenue, and while that happens your debt load will increase due to interest. And the bigger it grows, the more it threatens the lifeblood of your business, your cash flow. Keep your debt low and get out from under as soon as possible.
I agree this is #1. I have seen many new businesses fail because of "lack of capital," which means simply that they run out of money. The biggest offender: spending too much on high-priced equipment that must be paid for even when you don't have customers to pay the bills. Start small and grow only when you can afford to. Create realistic financial projections - over-estimate expenses and under-estimate revenue.
Create a Financial Plan
2. Having no marketing plan:
As I am wont to say, starting a new business is like being alone in a dark room - you know you are there but no one else does. The only way to turn on the light, the only way to get people to know you are out there, is through marketing and advertising.
It need not be expensive. There are scores of ways to get the word out without breaking the bank - everything from tweeting to flyers to creating a viral video can work. In fact, over at my site, www.MrAllBiz.com, I offer a webinar calledMarketing on a Shoestring (click "Webinars" on the homepage).
Many new business owners ascribe to the "Better Mousetrap" myth - that if they have a great product or service, the world will beat a path to their door. Not true. Won't happen. You can have the greatest thing since sliced bread and if you don't market it, no one will buy. Set up a marketing plan and work it. It's the only way to bring in customers.
How to Create a Marketing Plan
3. Not choosing well:
This may sound a little amorphous, but it's not - it has to do with looking before leaping, and that is always a good idea in business.... [Some] examples of not choosing well include:
- Partners: Before going into business with someone, do a project or two together. See if your styles are compatible. See if you think about money and growth the same way.
- Vendors: A contract with a bad vendor can doom your business.
- Bad location: It could be too expensive, or maybe it is too off the beaten path.
Choose wisely, grasshopper.
While I agree that you need to choose wisely, there are times when it's just not possible to know. A bad location can be overcome by great advertising, and a relationship with a vendor can be ended if you find out in time. Stuff happens. Sure, take your time before jumping into any business relationship, but be flexible and ready to make changes as needed.
Going into Business with Family/Friends
5 Tips for Finding a Business Location
4. Not having a great team:
There are 20 million businesses in this country that are one-person endeavors - solo practitioners, freelancers, independent contractors and so on. That is all well and good, but it still does not mean that you have to be totally on your own, and you shouldn't be. The problem with being too independent is that there is not another person around to give you feedback and share the work.
Find a mentor, find a coach. Find business advisors you can work with - more on that next week. Don't be afraid to ask for help. The sooner the better.
Finding and Working with Business Advisors
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