7 business mistakes you ought to avoid
– Neil Patel is a serial entrepreneur who blogs about business at Quick Sprout and is the co-founder of KISSmetrics. This article originally appeared here. The views expressed are his own. –
After 10 years of being an entrepreneur, you probably think that I have everything figured out, right? Sadly, I don’t. Don’t get me wrong, to a large extent I know what I’m doing, but just like my first day as an entrepreneur I’m still making mistakes.
The mistakes aren’t the same rookie ones I’ve made before, but instead they are bigger mistakes. Here are some of the mistakes I’ve made over the last few years that you should avoid:
Business mistake No. 1: Don’t get too personal with your employees
I love helping my employees out. When they are happy, it makes me happy. But over time what you’ll realize is that the closer you get with your employees, the more likely they’ll push their problems onto you.
I don’t mind helping people out with their problems, but if they can’t learn to solve them by themselves, how will they ever grow as individuals? So instead of babying people 24/7 make sure you help them out a bit, but don’t be afraid to watch them fall. When they fall, they learn how to pick themselves back up, and hopefully prevent it from happening again.
Business mistake No. 2: Don’t be too generous
10 marketing lessons for early stage tech startups
– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on Suster’s blog “Both Sides of the Table”. The views expressed are his own. –
I made every textbook mistake at my first startup, which is why I believe I was much more effective at my second one. I have adopted the motto “good judgment comes from experience, but experience comes from bad judgment.” We need to learn from doing, by trial and error.
If I can help you avoid some of my first-time mistakes it would be a victory. The following are some lessons I learned about early-stage startup marketing. Because market is such a broad topic, I’m restricting these lessons to PR marketing (as opposed SEO, SEM, product marketing, etc.).
1. Where Stealth is Good – There’s a lot of discussions on the Web about whether startups should be stealthy before they launch or not. The truth is there isn’t a “right” answer for your company. You need some guidelines to make decisions. My general rule is that it’s good to be stealth in the early days while you’re building your product and testing your market. Stealth does not mean constipated, paranoid and totally untrusting of others. It does mean not telling more people your future plans than is necessary. It means avoiding drinking too much at cocktail parties with other tech people and bragging about your plans. It means not over-sharing your deal with VCs or other investors.
The truth is that we work in a very small, tight-knit industry and news and plans spread fast. In the early days you don’t really want three extra teams hearing your ideas and gearing up to compete before you feel you’ve got a solid head start. Most people totally advise against stealth. They think that only by being open and testing your ideas in an open marketplace can you be successful. Be careful about this advice.
Also be careful about VCs. Most ones that I know have very high ethical standards, so I’m not concerned about that. But once a VC has heard your idea he can’t “un-think” it. And these ideas have ways of seeping into board discussions with portfolio companies as in, “have you ever thought about trying A, B or C?” It’s mostly unintentional, but tacit knowledge about ideas spreads quickly amongst the chattering elite.
I actually like finding entrepreneurs who are more circumspect, less braggadocios and generally more planned about their actions.
Great article; the only thing I would add is the luck – or lack thereof – in finding the right funders when the time is right. When my company was in need of funding (still early-stage) we found a facilitator (eSolve Capital; http://esocap.com) that were able to provide us with excellent conditions
Common budget mistakes for tech startups
– Ed Buchholz is the co-founder and CEO of 60mo, a cloud-based financial services company catering to small business owners. The views expressed are his own. –
Most everyone is familiar with the cliché: more money, more problems. But what if the problem is money?
Keeping your tech startup solvent requires the avoidance of several common budget mistakes. A budget or lack thereof can make or break a startup. Keep your overhead intact by doing the following:
Have a budget. Money should not disappear from your bank account into a fiscal black hole. At my last company, we were spending money but didn’t have an accurate view of where it was going. This experience is actually the primary reason my new company’s product, 60mo, exists. Organize expenses and revenue in whatever way works for your company. Make a cash flow plan. Keep current and accurate financial statements and analyze where you can trim the fat. Having a good budget is the beginning to avoiding common problems because it’s the common sense barrier between you and wasteful overspending. Avoid the first common budget mistake and actually create a budget.
Negotiate with vendors. If you are purchasing goods or services from others regularly, make contact and drive down the price. Negotiating will build important relations and reduce costs that are otherwise eating through your overhead. Vendors want your business and will offer discounts to get you to become a recurring customer. Remember even if you are purchasing online, someone somewhere is operating the site and might be willing to cut you a break if you take the time to contact them. At 60mo, we make the effort to reach out to all of our major vendors and establish a friendly relationship. It won’t always work, but its good business to at least try. Sixty percent of the time it works every time.
Minimize discretionary spending. In 60mo’s earliest days, we had a tendency to splurge on dinners out with the team whenever we had something to celebrate. When we started using our own product, we began to understand exactly how much those “team-building” meals were adding up. New businesses hemorrhage funds for unnecessary dinners, travel, and swag when they don’t have a clear budget and insight into their spending. The point of having a budget is to avoid waste. Be mindful of an expense’s worth, and your company will be worth more.
Plan for the future. Only focusing on the past and present gives companies a narrow image of what is going on inside of their finances. Think of accounting and dashboard tools as rear-view mirrors, they only show what’s behind you. Financial forecasting tools act as a GPS to get you where you want to go. By planning six months to five years ahead a company can strategically spend and save. With these tools one can manage liquidity, net present value, and project cash flow. For my business, I have a full five-year forecast with projected employee hires and “what if?” scenarios that allows me to be prepared for any situation. By thinking to the future you improve your present.
10 small business tax mistakes that will cost you
– Donna Fenn has more than 20 years experience writing about entrepreneurship and small business trends. She is the author of “Upstarts: How Gen Y Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success“. This article originally appeared on BNET. The views expressed are her own. –
There’s not an entrepreneur on the planet who likes thinking about taxes. I know, it’s only February, so you’re likely still in deep denial about April 15. But it’s time to get organized. Almost every aspect of your business has tax ramifications and if you don’t know what they are, you’re inviting trouble down the road (can you say “audit?”).
For tips, I recently spoke to Sandy Botkin, a CPA, attorney, former trainer of IRS attorneys, and the CEO of The Tax Reduction Institute in Germantown, Maryland. He’s also the author of “Lower Your Taxes — Big Time 2011-2012”. Botkin shared 10 common tax misconceptions that both fledgling and experienced small business owners are guilty of. How many of these phrases have you uttered?
1. “I can do it myself.” “Most small business owners do not have the tax knowledge they need to stay out of trouble, but they won’t pay for planning,” said Botkin. “They’re cheap so they use TurboTax. But TurboTax won’t represent them if they get into trouble.” Sure, as a member of the profession, Botkin has a vested interest in recommending that you hire a CPA. Maybe you really are capable of doing your own tax planning. Maybe you can also rewire your office, build your own website, and represent yourself in court. That doesn’t mean you should. Just sayin’.
2. “I keep my receipts so I don’t need a tax diary.“ Every small business owner must keep an accurate tax organizer, said Botkin, and it’s not the same thing as an expense log. “A tax organizer has all the questions that the IRS requires you to answer about travel, entertainment, and other expenses. It will bulletproof your records and eliminate procrastination, and if you’re audited, it shifts the burden of proof to the IRS,” he said. Anything that allows you to feel smug in the presence of an auditor has got to be worth its price, which is not cheap in this case. You’ll spend over $100 for a decent tax organizer/diary.
3. “Yay! A big fat refund.” Many people are thrilled when they get a big check from the IRS. Wrong reaction, said Botkin. “A refund means you’ve given the government interest-free money for a long time,” he said. “If you have withholding, you want to adjust it to the point where you get very little refund.”
4. “I’ll just borrow a little from employee withholding.“ When they’re short on cash, it’s often tempting for small business owners to dip into the trust fund that’s used for employee withholding and Social Security. “Many employers think ‘this is my money,’” said Botkin. “It isn’t. If they borrow from withholding or Social Security, they are personally liable, with huge potential penalties.”
Small Talk: Elephants and entrepreneurs
Mark Suster’s blog – “Both Sides of the Table” – has become a hotspot for people seeking an insider’s glimpse into the world of venture capital investing.
This week Suster wrote about the things in entrepreneur pitches that give VCs pause when considering whether or not to invest. Suster likens it to the elephant-in-the-room adage, more specifically: “those things that the VC would automatically be thinking about when you’re speaking but he/she may not immediately ask you about either for legal reasons or out of courtesy.”
Suster’s blog goes on to list some real-life examples of pitches he’s heard with Elephant-sized problems, such as the founder is no longer with the company or having Google as a prime competitor. Suster advises entrepreneurs to deal with their issues before they seek funding, as they will inevitably be addressed in their meetings with VCs. Suster says it’s better to be pre-emptive in this regard.
“There is only one way to deal with your Elephants – head on. Don’t pretend it isn’t in the room,” writes Suster. “Know in advance what you’re going to say and don’t wait for the VC to bring it up. When VC’s bring up Elephants they feel like they’re ‘catching you out’ and you’ve lost the high ground.”
REGRETS, I’VE HAD A FEW
If crooner Frank Sinatra was singing about small businesses, he might start off with this Associated Content story by Kevin Hagen that appeared on the Huffington Post about some of the biggest mistakes entrepreneurs make and advice on how to avoid them. Among the mistakes listed are: lack of planning, borrowing too much, spending too much and insufficient capital. We’re pretty sure most of these mistakes could be avoided by better planning, but the list may serve as a good refresher for would-be small business owners.
A more interesting article is “6 Business Mistakes I Hope You Make”, where author Michael Noker details some of the errors he made as an 18-year-old entrepreneur running his own Web-design company. Noker said he started his business for the wrong reason – to pay his tuition – which was expensive, so instead he ended up getting student loans to pay for it and then “had no real pressure or desire to get started, so I never really did.”
One of the biggest killers of success for entrepreneurs is when they go out and they pick up one project, and two projects, and three projects, and four projects. And five projects.
Great tips Neil, experience is absolutely the best teacher. I also like your aspect as an entrepreneur. Don’t be afraid to get wrong, all of us had been there when just starting. The most important is you need to learn from your mistakes and develop it to a better new you. Just like before when I’m starting to hire staff for my small business. I didn’t realize that I made I wrong decision, hiring staff from job sites like monster.com. Until I read some tips ( https://www.staff.com/blog/why-hiring-on ly-on-job-sites-could-be-a-mistake-for-y our-business/ )regarding mistakes when hiring staff. I found out that there are applicants who are good only on interviews but screw up on the actual work.