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Ask the Expert: Avoiding startup mistakes
Ask the Expert: Avoiding startup mistakes
03/07/2010

Q: Are there any typical mistakes that you see startups make that I can avoid? I am new to this entrepreneurship thing. — Asa

A: It is never fun to make a mistake in business, even if it is inevitable. And worse, mistakes are both more prevalent and more dangerous during the startup phase of your business because your idea has yet to be fully cooked. The startup period is, unfortunately, usually the "error" part of a "trial-and-error" phase for your business.

That said, even though mistakes are to be expected, they need not be crippling or even negative. Not a few entrepreneurs have stumbled into success when they discover ways to make money in their business that they didn't know were possible. For instance, Spencer Silver was trying to create a super sticky glue for his employer, 3M, when he mistakenly came up with an adhesive that was instead sort-of sticky. What to do with somewhat sticky glue? 3M created the Post-it note, that’s what.

So no, not all mistakes are bad mistakes, but there are some mistakes that can and should be avoided as you start your business:

  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 keep that indebtedness to a minimum and 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. While that happens, your debt load will increase due to interest. 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.
  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 and 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 or creating a viral video can work. Market and advertise your business, and then do it some more.
  3. Not choosing well. This may sound a little amorphous, but it’s not — it has to do with looking before leaping. That is always a good idea in business. For instance, some people get so excited about a business idea that they don’t really stand back and give it the proper, objective analysis they should. Then, for instance, they are surprised that the rent at their store in the mall makes turning a profit quite challenging or that this franchisor is hell to work with. Other examples of not choosing well include taking on a partner without seeing your styles are compatible or if you think about money and trowth the same way; entering a contract with a bad vendor, which can doom your business; and taking a bad location that could be too expensive or off the beaten path. Choose wisely, grasshopper.
  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. The important lesson here is to take advantage of the help that is out there. These include:
  • The Small Business Administration (SBA) and its Related Small Business Development Centers (SBDCs). These organizations offer tons of no-cost and low-cost counseling and seminars.
  • SCORE, which bills itself as "counselors to America's small business," does this too.
  • The American Rental Association (ARA) has a variety of resources available to its members, including plenty of help and advice for startups.
  • The ARA Foundation offers its Rental Executive Advisory Program (REAP). REAP is a cost-effective business consulting service that connects rental owners seeking advice on any aspect of their businesses with a REAP advisor, a rental veteran who offers rental-specific ideas and advice.
  • Business schools need businesses with which they can place interns.
  • Part-time employees can be hired inexpensibvely.
  • Business associates can become an informal board of advisors. Other entrepreneurs can become part of your mastermind group.

Mistakes may be inevitable, but these ones are not.

Editor’s note: “Ask the Expert” is a small-business advice column written by Steven Strauss, one of the nation’s leading small business experts. His articles first appear each week in USA Today. The new edition of his book, “The Small Business Bible,” can be purchased online at www.amazon.com. Should you have a question for “Ask the Expert,” please contact Strauss by e-mail at sstrauss@MrAllBiz.com.

 

 

 

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