Thursday, August 29, 2013

Mistakes to Avoid When Starting Your Business

imageThis article was written by John Rau, SCORE Orange County Business Mentor

According to bizcoach (see http://www.bizcoach.org/factsf.htm), common problems faced by business owners include:

  • Lack of knowledge about what is happening in the business
  • Failure to understand business numbers and how they relate to one another
  • Not enough money
  • Not enough customers
  • Too much competition
  • Failure to look into the future and plan future decisions
  • Insufficient time
  • Rapidly changing technology
  • Lack of certain critical business skills
  • The mistaken belief that hard work will overcome all other deficiencies

The inability to successfully address these types of problems can increase your chances of business failure. This is important as statistics provided by the Small Business Administration (SBA) indicate that “two-thirds of new employer establishments survive at least two years, and 44 percent survive at least four years”. Other statistics suggest that 50% fail in the first year and up to 95% fail within 5 years. Clearly the odds are against you if you don’t do your homework and carefully plan the launch of your new business.

Susan Ward of About.com Guide in her article entitled “8 Things Every Startup Needs to know, How to Make Your Startup a More Successful Experience” (see http://sbinfocanada.about.com) points out what everyone contemplating their own business startup should know, namely:

  • The playing field is never level
    • Owners of competing businesses may have more contacts in your industry, they may have access to more capital (deeper pockets), and they may even have a stronger support network of family, friends and investors.
  • People will not be keen to give you money
    • Particular types of startups are considered to be bigger risks than others. Banks and other traditional financial institutions are notoriously reluctant to loan money to retail or service startups.
  • It may make sense to keep your day job, if you have one and can keep it, until you are confident that your startup business will survive
    • Don’t expect to make money right away. In some cases, you won’t make enough from your new business to pay your personal monthly bills for an entire year-and it could be even longer! Keeping money coming in while getting your startup off the ground may be the best short-term plan.
  • Plan first, do second
    • A seat of the pants approach is a terrible way to start a business. There are a lot of things that need to be done for you to successfully launch a new business, and just haphazardly deciding to do this is a great recipe for disaster. Create a startup plan and follow it meticulously.
  • No matter how hard you try, you will never have all the expertise that you need
    • Initially you need to form a team consisting of at least a bookkeeper, an accountant, an attorney, probably an office manager, perhaps a social media manager, and other specialist types to help get your business going. You can expand the team as your business grows and the need arises.
  • A good idea is not enough
    • It’s not the idea, but how the idea is developed and marketed that makes the money.
  • Every small business owner has to be a marketer/salesperson
    • You have to pay attention to marketing and sales, especially in the startup phase. You must become the “spokesperson” for your business.
  • You should set it up right from the start
    • Set it up right includes such activities as getting the proper business structure, necessary insurance, meeting legal requirements (business license, government permits, etc.), bookkeeping and payroll services established.

In the context of Susan Ward’s good advice above, it’s easy to make mistakes such as pointed out by Mike Michalowicz in his article entitled “The 10 Biggest Mistakes Made by Small Business Owners” (see http://www.cnbc.com). He lists the following:

  • Trying to do it all
    • The greatest mistake entrepreneurs make is to believe that they can do it all by themselves. Surround yourself with people who are strong where your talents are weakest.
  • Not being forthright
    • If your business tries to cover up a mistake, it is just a matter of time before word leaks out. Be the one to break your own bad news and you will be perceived as honest and trustworthy.
  • Having no clear marketing strategy
    • You never know where, when, or how a new prospect is going to hear of your business. If you have a mix of messages out there, the prospects will have an unclear expectation of what your business can offer. Your company must present a consistent, clear message on all fronts.
  • Cutting prices
    • Cheaper prices don’t necessarily mean more customers. Most customers are willing to buy more expensive items because of the greater quality or the added convenience.
  • Having no “rallying point”
    • Clarify the purpose of your company, beyond just making money, and you will set the stage for attracting like-minded employees.
  • Setting unrealistic financial goals
    • Set specific, measurable, accountable, realistic and time specific goals to ensure continual progress.
  • Being all business, all the time
    • Don’t put your personal life on hold to focus exclusively on your business. Balance your personal and business life and you will actually do better in both.
  • Being a weak leader
    • The success of your company is contingent on you being a strong, effective leader. Don’t try to be everyone’s buddy. Set the course for the company, communicate it constantly and inspire your team to get to the next level.
  • Assuming you have no competition
    • Even if you have the latest, greatest, never-been-done-before approach to something, don’t assume that you have no competition. Competition is more than just the direct, obvious competitors. Competition is also all the available alternatives.
  • Trying to get rich quick
    • If you go in expecting to be rich overnight, you may become discouraged early on and give up your dream prematurely. Success takes time, perseverance, and a little bit of luck. Give your business time to grow.

Try to avoid the above-listed types of mistakes and pay attention to what Susan Ward said above in terms of what you need to know. Her final word of advice is “Startup to succeed, not to fail”.

Manage Your Time or Others Will Do It For You

This article was written by Harvey Mackay, from his blog, reprinted by permission

I’ll never forget an important time management lesson I learned in a seminar many years ago . . . especially how the instructor illustrated the point.

“Okay, time for a quiz,” he said, as he pulled out a one-gallon wide-mouthed mason jar and set it on the desk in front of him. Then he produced about a dozen fist-sized rocks and carefully placed them, one at a time, into the jar.

When the jar was filled to the top and no more rocks would fit inside, he asked, “Is the jar full?”

Everyone in the seminar said, “Yes.”

Then he said, “Really?” He reached under the table and pulled out a bucket of gravel. Then he dumped some gravel in and shook the jar. This caused pieces of gravel to work themselves down into the spaces between the big rocks. Then he asked the group again, “Is the jar full?”

By this time the class was onto him. “Probably not,” we answered.

“Good!” he replied as he reached under the table and brought out a bucket of sand. He started dumping the sand in and it went into all the spaces left between the rocks and the gravel. Once more he asked the question, “Is this jar full?”

“No!” the class shouted. Once again he said, “Good!” Then he grabbed a pitcher of water and began to pour it in until the jar was filled to the brim. Then he looked up at the class and asked, “What is the point of this illustration?”

One eager beaver raised his hand and said, “The point is, no matter how full your schedule is, if you really try hard, you can always fit some things into it.”

“No,” the instructor replied. “The point is if you don’t put the big rocks in first, you’ll never get them in at all.”

So, today, tonight, or in the morning when you are reflecting on this story, ask yourself: What are the ‘big rocks’ in my life or business? Then, be sure to put those in your jar first.

And by the way, you get the same size jar as everyone else. No exceptions.

What changes from person to person is the size of each rock. I’ve got a couple boulders in my jar: family first, always. Things like friends, my company, my speaking/writing “hobby,” maintaining my network, my volunteer commitments, my health, and my religion all take up a lot of space. The gravel is all the stuff that takes up more than a few minutes but doesn’t necessarily happen every day, like a committee assignment, a vacation, learning new software … you get the idea.

And now, the sand. You can decide whether to be that 98-pound weakling who gets sand kicked at him, or the creator of a spectacular sand castle. The sand is the yes/no stuff that absolutely has to fit around everything else after it’s in the jar. A little piece of sand in your eye is a big pain, and those are the ones that get the no-thank-you right off the bat. A little sand on an icy street is one of life’s little pleasures when you live in snow country as I do. You choose the sand. It’s your jar.

In other words, it’s your time. Change the rocks, gravel and sand into hours, minutes and seconds. Then decide what your priorities are and how much time you’ll spend on them. If you don’t, someone else will decide for you and you’ll end up with a jar full of heavy, jagged, nasty shards that nobody could touch without getting stabbed by another rock. Do you really want to spend your time working on other people’s priorities?

As Benjamin Franklin said, “If we take care of the minutes, the years will take care of themselves.” Good time management is taking care of the things that matter most to us first and keeping that jar of rocks in sight all the time.

My friend Lou Holtz has a great formula: W.I.N. — What’s Important Now? Use some of your precious time to figure out what’s important in your life and you will win.

What An Employer Looks For

imageThis article was written by Barry Mc Kinley, SCORE Orange County Business Mentor

A good interviewer is going to be looking for qualities in the applicant other than the obvious. They have already reviewed your resume so they know the facts they are now trying to learn about more you. They will be listening to what’s NOT being said, as well as what’s being said. Some of the items that can set you apart from the other applicants would be:

1. Creativity

Are you able to think “Out of the box”? Are you comfortable with the job and responsibilities changing. Are you willing to look at challenges from different perspectives?

2. Confidence

Do you relax in the interview? Are you able to project self-assurance to the interviewer?

Are you able to handle slowdowns in the conversation during the interview without showing nervousness?

3. Standards

All people are shaped and guided by their values. This becomes the core of our personality and being. Are your principles to get the job done at any cost or are good communications more important? Are you more motivated by quantity or quality? Will you be willing to accept the job being done 80% of the way?

4. Persistence and Follow-Through

These are skills (“backbone”) that help you complete jobs particularly when the going gets rough. The employer does not want to hire staff that will give up as soon as obstacles are placed in their way. They will be looking for accomplishments in your life that express your toughness.

5. Integrity

Are you willing to be responsible for your actions both when they are positive as well as negative. Are you quick to blame or point the finger away from yourself? Does your life show that you accept responsibility?

6. Clarity of Communications

Just because you believe that you spoke clearly and precisely does not mean that the listener received it that way. Top notch communication means accepting responsibility for the other person’s listening.

7. Passion

The interviewer will be listening to what you are passionate about. They will try to figure out what motivates you and if your passions will fit with their needs. They will want to insure that you have a thirst for life.

8. Personal Opinions and Views

The employer is seeking what you embrace or your philosophy of life. Do you see the glass half empty or help full. Are you more of a negative person always expecting something bad to happen? Do you blow up the smallest difficulty into a major issue?

9. Genuine

The interviewer is interested in the fact that you are acting like yourself or if you are putting on a front. They are striving to determine if you are comfortable with yourself and not trying to be something you are not.

The Nature of Luck

imageThis article was written by Jim Roberts, SCORE Orange County Business Mentor

All our lives, most of us have heard many stories about Luck. Business mentors, clergy people, high school and college counselors, Moms and Dads and motivational speakers traditionally teach us that luck really doesn’t exist. They tell us that what we think of as “good luck” is really just the product of good preparation, hard work, experience, strength of will and many other factors.

I have a different view – I think luck is very real in our business lives as well as our personal lives. What’s more luck is not random. It can be created and replicated, in other words, if you know what luck is made of you can create it. Here are the components of luck:

Luck Favors the Prepared Mind

Whatever your task is, whether you’re opening a business, trying to increase sales, or striving to increase the strength of a relationship, you must prepare yourself to the best of your ability. Learn everything you can, talk to other people who have been successful (lucky) at what you’re trying to do. Read books and prepare yourself just as a champion athlete prepares for competition.

You Will Fail at 100% of the Tasks You Never Undertake

We all know someone whose life and business philosophy is summarized by the mantra, “Play it Safe.” Those folks will never by lucky. The most they will attain is mediocrity. The fact is that there can be no reward without a risk. But risk can and should be managed. There is a huge difference between a well thought-out calculated risk, and a man who is merely reckless.

Assumption is the Mother of all Screw-ups

It’s a fact that the more data you can accumulate to support a plan, the more likely it is to succeed. Don’t ever do guesswork and call it planning. People who guess are rarely lucky.

All Glory is Fleeting

The roadside of business journey is littered with the corpses of companies who were caught reveling in their past accomplishments – so much so that they failed to plan for the future, failed to react (or in some cases even recognize) market changes. You’ve heard the stories about legendary companies like Montgomery Ward, F.W. Woolworth, IBM, and many others who got into trouble because they felt that the past would always be a harbinger of the future. Remember, the past is history, the future is opportunity.

Energy Cannot be Destroyed

When you allow your positive energy to be changed to negative energy, you diminish who you are. When you exert positive energy on another, you change who they are. Your employees, partners and co-workers will look to you for leadership and courage. It is your choice whether they will absorb positive or negative energy from you.

Success is What Happens when Preparation Meets Opportunity

After you learn the principles of luck, you must find the courage to seize the opportunities when they come along. If you are properly prepared, if you exude positive energy, if you learn everything you can about what you have chosen to undertake, and if you manage the risks appropriately, you will be successful most of the time. You will become “Lucky.”

Good Luck!