10 mistakes a new business owner should never make.

Photo by demangust
Having been self-employed in the past, I’ve made my share of bad decisions, and mistakes. Common mistakes when starting up your own venture can be avoided with a little planning and advice. You don’t have to re-invent someone else’s wheel to be successful.
1. Selling to the incorrect people - Don’t get me wrong, all sales are vital for the survival of any type of business, but pushing your business on everyone you encounter, including friends and family is not only offensive, but a complete waste of time also. Furthermore, trying to sell someone who doesn't need your product, or service is also a valuable waste of time and energy. If someone doesn’t need your product why even bother? Who are the wrong people you may ask? EVERYONE!
Read on………….
Some customers are an easy sell, while others may be very hard to work with. If someone is broke, and concerned about every dime that they spend, they won’t be a very good client during their lifecycle. (Accounting term for “the long run”)

1. Don’t be shy telling your customers that they are not worth the time, and energy. (But be tactful!) Let your competitors deal with them instead. You’ll not only save yourself a headache, but you’ll re-capture more of your valuable time to focus on your better customers.
2. Be Picky – Just because a person is interested in doing business with you, it is not an automatic reason to accept. In my first few months of business, I said yes to maybe half of the people who were interested in my product. I destroyed too much of my valuable time chasing deals with people that were too much of a gamble to begin with. I wasted lunches (time = resources) from arbitrary people who were only interested in seeing if there was anyway that we could accomplish something together. Virtually all of them never made me any money. Use your gut feeling. If you think that a meeting will be a pointless one, then it probably will be. Today I accept about 10% of such invitations, and if an offer refuses to grab my attention right away I will pass it by. Saying no to feeble opportunities is the gateway to better, and more profitable opportunities.

3. Spending too much money in the beginning - Unless you have steady cash coming in don’t spend money unless it’s absolutely necessary. Before you know it, you can wind up going into debt with your credit cards and into the poor- house shortly afterward. Never, ever, use a credit card unless you know that you have the ability to pay it in full when the next statement or two comes around. Every dollar you invest MUST be returned through sales. A business should always put money in your pocket (cash flow) so have a game plan for generating positive cash flow. All of your business expenditures should come out of this one concept.


4.Spending too little money - Don’t let being frugal get in the way of effectiveness.
Don’t buy antiquated equipment to run your business with. Don’t overspend on high-end furniture either. Be functional, not trendy. Don’t buy cheap computer equipment when your livelihood depends on it.

5. Fake till you make it - If you’re a one man operation, don’t refer to yourself as we. Unfortunately this is something many Entrepreneurs do, but really shouldn't. There is nothing to be ashamed of as a one-man operation, especially in today’s market. It’s completely acceptable to refer to your yourself as an I when you’re the only one working. Lying that you’re a we is not only dishonest, but silly as well. You will lose respect from your customers if you promote yourself that way, and are discovered. Promises from a “we” when it’s only coming from an “I” are worthless. Some recently self-employed individuals think they have to become actors. The business model that they promote to the world is pure fantasy, and worthless. If you have to pretend then don’t go into business.

6. Don’t assume a contract will protect you - I’ve made so many mistakes that I’m embarrassed to admit to them all, even though I have since learned from them. I’ve had contracts with corporations that were allegedly on the up-and-up, and they weren't worth the paper they were written on. When a company president wants out of a deal, no piece of mail will help you. Do I go to court? I’d rather spend that time accomplishing more meaningful work. A contract won’t save you if a relationship breaks down. All a contract accomplishes is defining everyone’s commitments, and roles. A lawyer once told me that no deal follows a contract to the letter; most never even come close. The only thing that you must remember about written contracts is that they come second to relationships. Don’t ever assume that the contract in and of itself is the deal. It’s only paper.

7. Going against your better judgment - Judgment is very important in business. Logic is not the vocabulary of business, and giant corporations are red-lighted by a CEO’s bad judgment. I think the meltdowns of 2008 – 2009 has proven that to us all. If you make the mistake of basing your decisions on logic alone, you’re destined for failure. Use your intuition to guide you to profitable places in the business world.

8. Formality – or a lack thereof - Business is built on trust, and relationships. Some business environments require a certain amount of formality, but in most cases too much formality can get in the way of an adequate business venture. Business works best when it’s a one-one-one situation. Better to contact me by telephone or Email with a “Hi Ray!” than a Dear Mr. Michaels, and then launch in a long-winded script. I’ll more often just ignore you. People don’t want relationships built off of faceless relationships; they only want real human relationships instead. The key here is treating your business relationships like friendships. I won’t give loyalty to a wall.

9. Value-based focus - It’s easy to fall into the trap of thinking that the sole purpose of running your own business is making money, when the ultimate purpose is to create value for others. Why does your enterprise exist? Does it provide value, both for you and the customers? The basic value of this Blog is to provide personal growth to it’s readers. When I was a pilot, the value was to get people safely to their destinations on time. The more you recognize what value you’re trying to offer, the better off your focus. Many times entrepreneurs lose clarity of what value they need to provide to their customers. If your entire goal is to sell, and let the cards fall where they may, you have a lousy business model.
The world has enough “stuff”. What it needs more of is value of the genuine kind, and that is where you need to focus all of your efforts in order to succeed.

10. Failure to optimize - Although value is crucial to a business, it’s similarly naive to presume you can center focus on creating worth, and the rest will fall into place on its own. You can always provide value, and still lose money, which indicates you have to find a delivery method in a cost-efficient manner. Many times someone’s first attempt will be less than optimal. You’ll invariably wind up wasting money, and resources in the interim.
Once your process is in place, take it apart and optimize it from the start, and keep on repeating this procedure from time to time, constantly looking for areas to become more cost efficient with.

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