During my 40 years in
business, working as a small business advisor, I’ve learned that it’s better to
learn from other people’s mistakes than your own. That’s why I’ve put together
a list of some of the most common errors I’ve seen over the years.
I’ve
borrowed the cash I need to start from my best mate.
I know what you’re
thinking; it can’t go wrong!
WRONG – He’ll call you every day, he’ll start
telling you what to do, he’ll want his cash back for something else; whatever happens
this is the surest way to say bye-bye to your best buddy.
If your business is that
good – borrow the money from a bank or try one of the government backed schemes
(you’ll need to Google “business loans” to find them) not family or friends,
it’s the quickest way to lose even the best friend.
Jumping
the gun
You’ve just invented,
the “next best thing.” It can’t fail and everyone loves the idea. So you go out
and raise the cash and get going straight away before someone else steals the
idea.
WRONG – Just listen to my little tale of woe:
A friend of mine had a
fabulous idea. She invented a flag which she thought she would sell to
undertakers to give to people driving in funeral processions. She bought
thousands of black flags and that’s when her problems started. She’d paid too
much, made no profit, the flags fell to pieces as you drove along and… the
Funeral Directors hated them.
You
don’t need a limited company
All you want to do is to
clean windows for a living; it’s simple, effective honest work. You’ll keep the
proper books so you won’t need to get into complicated company stuff.
WRONG – Your first job is doing the windows of
the local BMW showroom. You deal with the front windows with no problem, it’s a
breeze. The back of the site is more difficult; all of the new cars are stored
there and it’s difficult to get to the top windows. You manage it but the
bottom of the ladder slips. You fall on to a brand new 7 series, you bounce off
and then roll down the hill, bucket and squeegee in hand, breaking windscreens,
denting roofs and so on. The damage comes to £65,000 and you, my friend, will
have to pay it all.
If you had a limited company you would not have had to pay anything even
though it was your stupid mistake. Oh, and don’t be fooled – public
liability insurance doesn’t always pay out!
Business
plans are for banks
You really don’t have
any need for a business plan and you certainly don’t have the time to waste
preparing one. Anyway you can download them from the bank and fill them in
online.
WRONG – of course you don’t have to have a plan
and the ones you get from the bank are very good – for the bank! The problem is
that without a plan, you won’t have a clue how you are doing.
A proper business plan
gets you to think – in advance – of all the mistakes and problems you might
face and how you will deal with them. It will give you a map of your future,
something by which you can compare your progress. A business plan is vital!
The
internet will make me a million overnight
The Internet is the
simplest and cheapest way to start up a business. The Internet is a fantastic
resource and it’s making many people very rich.
WRONG? No! Everything I’ve just said is true but…
does it apply to you?
It’s really easy to set
up an eBay shop, to get products on Amazon but the reason we don’t all do it,
is because it takes a lot of time and effort to make money. Selling on the
internet is not just about having a shop; it’s about getting your name known,
convincing people to buy and it takes time, perseverance and knowledge to get
anywhere – just the same as it does with any other platform.
I’ve spent a long time
in business and I’ve seen a lot of very good people fail. Not because they were
stupid nor because they had bad ideas. They failed because they fell into some
of the simple traps I’ve outlined here. You need to plan any new business very
carefully before you launch. Think things through in detail before you jump and
don’t hesitate to seek advice – but make sure it’s from someone who knows what
they are talking about!
Many thanks to Chris H. for
this brilliant blog post about what not to do if you are starting up! Chris is
a Lawyer and Business Expert, a PPH Super Hero and he is also one of our
Ambassadors. He specialises in business plans, consultancy and in providing
legal advice. Check
out his Hourlies and if you need some advice from an
expert with over 40 years of experience, he’ll be happy to help you out!
