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5 Common Mistakes That Crush New Businesses

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Redtea
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5 Common Mistakes That Crush New Businesses  Reply with quote  

Despite its flaws, America is still the greatest entrepreneurial market in the world. You wouldn't know it listening to the perpetual gloom, doom and petty whining of popular media, but there are few other places it's easier to start and run a successful business than right here. This here is America and it's still the land of opportunity for those with the drive.

All the same launching out on your own is fraught with potential pitfalls; financial disaster stalks new businesses like a predator in the night and the majority of small companies don't make it. Only rarely are the reasons a new business fails external; more often the seeds of failure are sown during the very first steps in planning. The mistakes budding entrepreneurs make are remarkably similar.

Debt

Sometimes borrowing money to get your business off the ground is unavoidable, but excessive debt will strangle profitability and rob new businesses of much needed cash. Taking on too much debt early on is like an airplane too heavy at takeoff; it may look impressive headed down the runway but it's not going to get off the ground and the trip is going to end badly.

Expecting To Make a Profit Too Soon

There are very few businesses that are profitable straight out of the gate, no matter how large the product margin. Every new business will require a stash of cash to pay the bills until it can start bringing in enough cash to be profitable. Too many times entrepreneurs will raise just enough cash to get the business going but not enough to keep it going. It's important to structure debt and expenses with this in mind. It may be a year before your business can comfortably start to pay back loans and it may need supplemental cash for months after you open the doors.

Never Modifying Your Business Plan

Surprisingly, most people planning on starting a business do pretty well on their initial business plan. It's not that difficult to get a book like The Business Planning Guide by David H. Bangs or take a small business class and follow the steps of putting together a business plan. After that it goes into a filing cabinet and never sees the light of day again. A business plan should be a living document that changes as your business grows and adapts to new realities as they arise. Too many times people will start off with a good plan
-- no, a great plan and a year later they're flying blind.

Hiring Employees Too Soon

Employees are expensive and bringing in too many people too fast will drain cash reserves at an alarming rate. Each employee has to be profitable the day you hire them It's easy to get busy and stressed out and imagine that hiring someone to help is going to make life easier. But unless you know exactly how much cash that employee is going to bring in and have enough cash in reserve to make payroll until they're profitable, hiring to meet short-term demand is almost always a big mistake. Hiring the wrong people is just as deadly but easier to avoid.

Getting Emotionally Attached

A new business can sometimes spark maternal instincts in people that lead them to make indulgent decisions. This is not a valued family pet that needs an expensive operation, its not your baby, it's a business. If you're not going to make it, it's better to close the doors and live financially to fight another day than to put up the house and your kid's college fund in a valiant effort to starve off the inevitable.

Running a business means treating it like a business and not a hobby. It takes cold calculation and a sharp pencil to make a business work and the ability to adapt to a constantly changing market. Being an entrepreneur means learning to become comfortable with discomfort and constantly finding new ways to stretch resources. It's no easy task and it's critical to avoid the common landmines that put small companies out of business.








-RedTea
Independent News for the Right-Minded American





redteanews
Post Thu Aug 07, 2014 9:54 pm
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JonCartoon
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 Reply with quote  

Huge post but I read this Laughing

agree with most of your statements.
but the last one.
if the business will not bring you pleasure, he never will be able to become truly successful.
All great ideas at first be just as a hobby.
So, love what you do, and you get a result
Post Fri Aug 08, 2014 2:28 pm
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payment proof
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I tend to agree with JonCartoon. If you love what you do, you remain motivated and work hard. I think you made an excellent post though Redtea, and there are business decisions that need to be made with logic and not emotion.

See Proof. You can make free money online.
Post Fri Aug 08, 2014 10:11 pm
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Hollyboy
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I also agree with Jon.
You must love what you do.
but business it only business.
interesting information, if I going to start business, I will follow your advice
Post Tue Aug 12, 2014 5:31 pm
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Bone7
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nice information.
business is a not for weak.
and of course, before start do something, you must be totally prepared. like in finance, also and in moral
Post Tue Aug 12, 2014 9:00 pm
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vaidhegipatel
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Hi, according to me it is an awesome post and also helpful for me. Few points are not mentioned here such as lack of infrequent or no use of technology, which could save their time and efforts.
Post Thu Aug 21, 2014 12:53 pm
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JamesMartin
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The other thing Iíd add to this is a willingness to experiment. Iíve seen many people who are great at coming up with ideas, but donít do anything with those ideas. Or theyíll analyze an idea to the point of killing it. We often wonít know until we actually try.
Post Thu Aug 21, 2014 1:07 pm
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stockbrokers
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how long do we normally wait for real profit?



What your stock broker doesnít want you to see.

http://easypcinvestor.com/
Post Wed Sep 10, 2014 8:31 am
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