| tion_start --> | | | | specialty food products. The owner loved spicy food, |
| Do you remember when you first started your small | | | | so decided to offer hot sauces from all over the |
| business? Remember the excitement? Do you recall | | | | world. He expanded the concept such that a great |
| how it felt when the phone rang or someone walked | | | | deal of his inventory was essentially hot sauce. For |
| in the door? First, let me commend you on entering a | | | | months, he didn't acknowledge that his sales had |
| profession that is true to your passion, and | | | | significantly decreased, because he was so excited |
| furthermore, one that serves others. | | | | about the idea that people love hot food - he loved |
| In this article, I'm going to share with you some of | | | | hot food. Less than a year later, he was sadly forced |
| the common mistakes that small business owners | | | | to face the reality when he could no longer pay his |
| often make. If you've fallen prey to one or more of | | | | bills and had to close the business. |
| these, it simply means that no one told you about | | | | It's always easy to see it in other people, but very |
| them yet. Once you know, then you can focus on | | | | hard to see in ourselves. Is there a product service |
| solutions. And, perhaps you'll find that you are already | | | | that you created, which for whatever reason has |
| entirely on track, and this may re-affirm that you are | | | | few sales? Consider areas of business where you are |
| headed the right way. | | | | being guided by emotions, not facts. |
| MISTAKE #1: | | | | THE SOLUTION: |
| OBSESSION WITH THE SERVICES YOU PROVIDE | | | | When we are emotionally driven in business, our |
| OR THE PRODUCTS YOU SELL. | | | | strengths become weaknesses. Self-confidence |
| In business, we ideally view the products and | | | | becomes arrogance, ambition becomes ruthlessness, |
| services we sell as generic "black boxes" that either | | | | quick-thinking becomes impulsiveness, strategic |
| make money or don't. Imagine you own a gas station | | | | risk-taking turns to gambling. And one clear sign that |
| - the old fashioned kind that just sells gas and maybe | | | | emotions are taking over is that in discussions of a |
| fixes cars (no mini-mart inside). | | | | given topic, there is a clear need to "be right" instead |
| One day, a salesman comes to you and says "Hey, I | | | | of a striving to do what is best for the company. |
| want to put a soda machine in front of your gas | | | | The solution is simply to back away and treat it like |
| station. You can buy cans of soda at $0.25 each and | | | | the "Black box" we discussed earlier--it's just a soda |
| sell them for $1.25 each - you make $1.00 on every | | | | machine that makes money or it doesn't. Another |
| can of soda someone buys." He offers to rent you | | | | technique is to ask someone else for their honest |
| the soda machine for $100 per month as long as you | | | | opinion with the understanding that you will not |
| agree to have him be the one you buy soda from. | | | | interrupt them, or offer any feedback other than |
| You agree and find that you sell 20 cans of soda per | | | | asking informational questions. Remember, successful |
| day, or 600 per month. In other words, you make | | | | business is driven by facts, not emotions. |
| $600 per month selling soda, then pay the sales guy | | | | MISTAKE #5: |
| $100 of that for renting you the soda machine. In the | | | | NOT HAVING A BACKUP PLAN. |
| end, you make $500 profit each month. | | | | This one is pretty straightforward. Any time you try |
| So, what does this have to do with running a small | | | | something new, at least have a rough idea of what |
| business? | | | | you will do if it doesn't work. When an airplane flies |
| You probably couldn't care less about selling soda, | | | | toward it's destination, before it even takes off, the |
| may not drink it and may even emphasize how | | | | pilot always selects an alternate airport in case he |
| unhealthy it is for people. Exactly. And the gas station | | | | can't land at the original destination. And, he makes |
| owner feels the same way. He couldn't care less | | | | sure he has enough fuel to get there. He doesn't plan |
| about soda or soda machines, but as a business | | | | all the details, but just knows what the alternative is |
| owner, it's a "black box" that earns him $500 per | | | | and that there's enough gas in the tank to make it. |
| month in cash. He puts some stuff into the black box | | | | THE SOLUTION: |
| (rents the machine for $100 and fills it with soda) and | | | | I encourage you to do the same thing with any new |
| money comes out of it ($500 in profits). | | | | business tactic. If you take a lot of money to invest |
| THE SOLUTION: | | | | in new product inventory, expecting you can make a |
| For any business to be truly successful, the owner | | | | killing selling it, have a backup plan. What would you |
| needs to be able to step back and view it as a | | | | do if it didn't sell? What if it was a total disaster? In a |
| collection of "black boxes" that either generate | | | | case like this, you might decide that you could sell it |
| money or support another black box in generating | | | | at half it's value to a large retailer, but at least it |
| money. Evaluate each major method or strategy | | | | wouldn't be a total loss. You want to make sure that |
| your company uses to make money. Let go of | | | | you're not going to go out of business if an idea |
| emotional attachment to things like favorite services | | | | doesn't work. Always have a rough idea of a backup |
| or products - if they don't make money for you, | | | | plan. |
| change them so they do, or eliminate them. If you | | | | MISTAKE #6: |
| can't bring yourself to do this, acknowledge that this | | | | RUNNING OUT OF CASH. |
| is an area of charity or contribution that your | | | | This one sounds obvious, so let me clarify. This |
| company participates in. But whatever you do, be | | | | mistake is about having a plan for what needs to be |
| honest with yourself. | | | | done to create a successful business, but running out |
| Remember, if your business doesn't make money, it | | | | of money before it gets there. For example, suppose |
| won't be around to help anyone in the future. Keep it | | | | a new yoga studio owner has estimated that it will |
| profitable! | | | | cost $150,000 to open the yoga studio, buy all |
| MISTAKE #2: | | | | needed equipment, supplies and inventory, and pay |
| BEING IN A RUSH. | | | | operating expenses for one year. After this point, |
| Business usually takes time. Our society is so | | | | the owner expects to have enough students, clients |
| wrought with instant gratification, we often overlook | | | | and customers that she will be able to cover the |
| the fact that things take time. Just as the farmer | | | | cost of all her monthly expenses (including paying |
| can't plant crops too late in the season, then try to | | | | staff and herself) and begin paying back the |
| "rush" them to grow, certain aspects of business | | | | $150,000. |
| take time. If you are trying a new type of | | | | However, imagine that getting things going ended up |
| advertising strategy, it might take three months | | | | costing $200,000 and even at that, there isn't much |
| before you can tell if it works or not. | | | | left for an advertising budget. After one year rolls |
| THE SOLUTION: | | | | around, she's not even close to making enough |
| Learn from someone else who has done it | | | | money each month to pay expenses (in part |
| successfully before, and ask them how long they | | | | because she didn't have money for advertising), let |
| waited before seeing results. If we plan ahead and | | | | alone repay the debt. She has run out of cash. |
| act early, we won't be in such a rush at the end. For | | | | THE SOLUTION: |
| example, don't think about holiday promotions in | | | | First, make your cost projections worst-case. A quick |
| November, instead plan them in September in case | | | | way of doing this is to figure out best-case, then |
| some actions need to be taken early. We can often | | | | double it. No kidding, you'll be pretty close to the |
| save money by starting early as well - after all, have | | | | actual cost about 80% of the time. If you think it will |
| you ever been to a workshop that cost more if you | | | | cost $10,000, then make sure you have $20,000 |
| signed up last-minute than if you registered a month | | | | available (but still try to do it in $10,000 and in fact, |
| or two in advance? (Hopefully you use this strategy | | | | base your whole budget on $10,000). Next: Plan, Plan, |
| yourself with any programs you offer.) As you get | | | | Plan! So many people dive in without a plan, only to |
| better at a particular aspect of business, you'll be able | | | | find out they spent lots of time and money on things |
| to do it faster, but in the beginning, it takes time. Be | | | | that do not generate any return. Bottom line: Expect |
| patient, evaluate your results and make changes as | | | | it will take twice as much cash as you think. |
| needed. | | | | MISTAKE #7: |
| MISTAKE #3: | | | | RE-INVENTING THE WHEEL. |
| BELIEVING THAT TECHNICAL SKILL IS THE KEY | | | | Lots of people (and companies) have opened and |
| TO SUCCESS. | | | | operated successful businesses for years. There are |
| So often, we believe that with lots of ability in our | | | | people who know the answers to questions that |
| art we will succeed. We assume that if we enhance | | | | frustrate you and problems that cost you money. |
| our skills and have perfect form that this will make | | | | One reason franchises are so successful is that they |
| our business more successful. Sadly, this has relatively | | | | give a business owner answers to nearly every |
| little truth to it in business. Technical skill alone is not | | | | question regarding running the business. |
| the key to success, and in fact, technical skill is only a | | | | THE SOLUTION: |
| small part of success. If business is slow, we often | | | | So, don't re-invent the wheel. I can't emphasize this |
| tend to consider getting more training, another | | | | enough. There are people who know how to run a |
| certification or something like that. The real solution | | | | small business very profitably. Find them. Observe |
| usually lies somewhere in business skills and | | | | them. Talk to them. Model them. They may even be |
| management. Ask yourself about these areas of | | | | willing to actively mentor you. If you find a successful |
| your business: Marketing, Sales, Accounting & | | | | business similar to yours in a non-local area (that is, |
| budgeting, Customer service. I certainly don't want to | | | | they don't compete with you), the owner may be |
| minimize the value of your mastery of your field - | | | | more than happy to share. If you need to hire |
| this is definitely important. Rather, I am emphasizing | | | | consultants for marketing, web site design, business |
| that in business, other things usually count more. I | | | | planning, accounting, and so forth, then do it. It's |
| know it doesn't seem right that someone who | | | | expensive up front, but once you learn the right way |
| doesn't have nearly the ability that you do should | | | | to do things, you can either take it over on your |
| have all the clients, but that is generally the reality in | | | | own or hire someone lower-priced and tell them what |
| business. | | | | to do. |
| Consider the example of the most successful | | | | Bottom line: If someone else has done it before |
| restaurant in history, McDonalds. Could you cook a | | | | successfully, learn from them before trying to figure |
| better burger than they do? Of course - anyone | | | | it out on your own. |
| could. It's not their skill in making burgers that makes | | | | IN CONCLUSION: |
| them such a success. They do the other stuff so | | | | There you have it - the seven most common |
| well that people have learned to like their food. | | | | mistakes small business owners make in business. |
| THE SOLUTION: | | | | Few of us ever had a class or mentor to teach us |
| Just as you can watch someone's form and point out | | | | how to run a business. Unfortunately, 8 out of 10 |
| specific errors that they are oblivious to, you also | | | | small businesses will fail because of this lack of |
| have the potential to see your business in the same | | | | experience. Do whatever you have to in order to do |
| way. With the right perspective and knowledge, a | | | | it right (remember, don't re-invent the wheel!) Read |
| business owner can very specifically identify a | | | | books, get online courses, find a mentor, get a good |
| problem area and what needs to change. But only in | | | | business coach and model a successful business just |
| rare cases is the problem actually the technical skill of | | | | like the one you're trying to do. There are so many |
| services being delivered to the customer. | | | | people who are really successful at running a small |
| MISTAKE #4: | | | | business. |
| BEING SO EXCITED THAT YOU ARE DRIVEN BY | | | | Learn from the experience of others and be one of |
| EMOTIONS, NOT LOGIC. | | | | the one's who has passed the stage of hard work, |
| Sometimes we get so attached to an idea - maybe | | | | and now enjoys doing just what you want to in your |
| one we created ourselves - that we forget to do a | | | | business. |
| logical analysis. I remember a small store that sold | | | | |