10 Biggest Mistakes Never To Make
When Starting Any Business
by Daniel Moncur-Sime, 06-07-2008
Knowledge is Power – If you apply it.
Before starting out on any business venture it is prudent to understand that you’ll probably make many mistakes on your way to success. Some you will have been warned about, others not. On the most part you’ll probably only learn from them once you’ve made them and then assimilate it into the core of your business knowledge.
After speaking to many business owners and entrepreneurs, and being one myself, I can attest that these are the most frequent and biggest most fundamental mistakes never to make. After all, I have made them all and some I was told about but failed to truly take on board.
So without any further wasting of time, here they are:
- Never let expenses exceed sales.
This is an obvious one but the killer of most businesses. Only buy what you can sell, and never spend on big things when little will do just as well.
You’ll say, ‘but when I start I don’t have any sales’. Yes, that is true, but never confuse expenses with starting investment capital.
- Start small – Grow quickly.
Too many times start ups fail because the ideas were too big and the entrepreneur wanted to do too many things. Shave off everything until you get to the core of what you want to do.
With me it’s to take head turning creative photography. All the graphic designs, creative team organisation, marketing knowledge support just adds huge value to my worth and are bolted onto the photography.
- Failure to collect receivables (money owed to you).
Busy people can often overlook regular invoicing and collection of debts. You don’t want to be bothered by collecting because people are giving you work, and that is what you are there for.
But you won’t be there if your cash flow fails to sustain you. It will cost you money to collect debt (even in interest paid to the bank for that working overdraft you always use). Get payment up front first, or at least a deposit.
- Failing to take care of employees.
Your employees make sure your business keeps doing the things that are necessary for survival when it grows to the point that you can’t do it all. A happy work team is one that will look forward to coming into work and will out perform an unhappy work team. Be a considerate, fair, and rewarding leader.
- Failing to take care of customers.
No customers equals no business. It really is that simple. But it’s easy to get work so remember those who give it to you and thank them Show respect and gratitude and treat them with regular communication and care. The reason is simple: it costs less to keep and existing customer than to gain a new one, so don’t be complacent.
- Inadequate starting capital.
Starting up operations always cost more that what is considered. Unless you have lots of experience in starting up cost and factoring in unexpected costs, then add 50% to your capital start up costs.
It’s far more confident knowing that you have some capital left over to pa down that loan than it is to go asking for more. The lender will say ‘but I already gave you what you asked for, why do you need more? That doesn’t show much forethought – my business is about forecasting when you’ll repay my loan!’
This is true and if you pay the loan off on time or sooner you’ll find it easier to get more capital. Quicker and with less effort because trust was already been established.
- Cash flow over capital.
Get this right. Make sure you can pay your operational costs, especially your staff, rent and utilities.
Never spend more than your costs and factor for lean months by building a support cushion from the fat months.
- Underestimating the time it takes to break even.
Ever heard of a project overrunning? It’s the same principle. Every entrepreneur is ambitious and thinks they can achieve big things fast.
When starting up, it’s usually the opposite – we achieve small things slowly! But we are always looking upwards. This relates to starting capital and cash flow, so double the time.
If you break even before this you’ll have good reason to celebrate and other people wit vested interests will be impress with your execution.
- Overestimating the size of your market place.
Many times we think that everyone will buy our product, but really find that only a few will.
It’s easy to say ‘Wow, China has a billion people and if I could reach just 1% that’s 10 million customers and I’d be a millionaire!’
But ever wondered how to reach your market? What if they don't have the desire to buy what you are selling? Most people in China are far worse of than you might think.
- Starting a business without an exit strategy.
Why did you start your business? For the lifestyle? So you had no boss to say you’ve got to be at work from 9-5? Whatever it is you won’t be doing what you want to do all the time.
Being an entrepreneur is not being a slave to your new work – it’s choosing your life. So work out when and how you’ll get to choose next. Maybe you’ll build a company and sell with an initial public offering on a stock market... Maybe, it’s to provide you the funds and a route to traveling the world...
Be clear on your goals and keep your sight on them, and knowing when you achieve them is after you exit your business.
So go out there, take the advice to heart and be a success. Others will look on and wonder how you achieved the life you live!
To your success!
Daniel Moncur-Sime
Photographer, designer and entrepreneur
Written by Daniel Moncur-Sime, for your business success. To contact me at your convenience, email me dan@studio33red.com or call 01432 341800.
Feel free to copy and distribute, but where you do please use this attribution statement, keeping the links intact.
Attribution Statement: This article was written by Daniel Moncur-Sime, entrepreneur and expert photographer, first published at www.studio33red.com. To sign-up to receive your own FREE subscription to the Red Alert e-zine and claim FREE money making e-books go to www.studio33red.com.
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