7 deadly sins of small business

Q: Hi Steve. I started a business long ago and but it didn't last too long. Well, now I have an opportunity to do so again. I am excited and ready, but I don't want to fail again. Any advice you have to avoid that unenviable fate would be appreciated.

— Lynn

A: Being an entrepreneur is certainly a mixed-bag of nuts, isn't it? On one hand, it's fun, exciting, creative and interesting. On the other hand, it can be nerve-wracking, tiring and challenging. One of the things we're trying to do at Microsoft Small Business Center is to help you increase your positive small business experiences and to offer helpful suggestions so that you can decrease your negative ones.

Being aware of potential business problems before they arise is one way to avoid negative business incidents. This is as true for the seasoned entrepreneur as it is for the novice.

Accordingly, here are my 7 deadly sins of small business. Avoid these, and your chances for long-term success increase dramatically.

1. Financial mismanagement: This business sin can take many forms:

• Undercapitalization: A huge mistake that too many startups make is not having enough money from the get-go. Simply put, starting a business without enough money is a big mistake.
• Too much overhead: If cash flow is the life-blood of your business, then high overhead is its Dracula — it will suck that life-blood right out of your business and kill it. One of the best pieces of advice I got when I started my first business was "keep your overhead low."
• Too much debt: Like overhead, too much business debt can cripple even the best business.

2. Failure to plan and brand: It's easy to get caught up in the day-to-day minutiae of running your business and many entrepreneurs fail to see the big picture. But it is precisely that big picture that helps you grow successfully. Knowing where you want to go and how you plan to get there is essential to achieving your business dreams.

This is especially true when it comes to your brand. You simply must know what your promise is to your customers (i.e., your brand), and then reinforce that promise with everything you do.

3. Putting all of your eggs in one basket: Sure, it's comforting to have that one big customer, but what happens when he or she says goodbye? So, like a good Wall Street investor, you should diversify your business portfolio.

4. Not using available technology: I've said it before and I'll say it again: The computer-Internet-technology revolution is the most important thing to ever hit small businesses. It has allowed us to compete on an even playing field with larger businesses and in far more markets. Not riding this wave is a huge mistake.

Powerful PCs, small business servers, Web sites, incredible business software, wireless networks, cell phones and more are all now available to help you succeed. Get with the plan, Stan!

5. Failure to market adequately: Most of us small business people find a few marketing tricks we like and then get a bit lazy, comfortable in the (supposed) secure knowledge that we know what we are doing. But the fact is, things change. Customers come and go. Viewing, listening and reading habits have changed. And suddenly, that marketing method that worked so well is stale.

So don't rest on your laurels. Keep experimenting with your marketing and finding new ways to grow. (To find cost-effective ways to market your small business, check out Microsoft Office Small Business Edition 2003.)

6. Not knowing the numbers: Many small business owners are long on ideas and short on detail. Want to open a second store? Well, what exactly will that cost you, and what is your return on investment? You have to be able to adequately find and crunch the numbers if you are going to succeed in business. If you don't feel comfortable with small business accounting, find the right financial software or take a class.

7. Relying on yourself for everything: Sure you wear many hats, but that doesn't mean you have to wear every hat. Get some help, and if you cannot afford help, get an intern.

In addition, successful small business people understand that they don't know everything. They bring in expert help to fill the gaps. That may mean hiring a lawyer, an accountant or a marketing whiz.

So there you have it. Avoid these seven deadly sins and you may get your small business on the right track to success.

How did Steve answer other questions? Read his previous columns

Steve Strauss is one of the country's leading small business experts, a columnist for USATODAY.com, and the author of the "Small Business Bible." If you would like to have Steve speak to your group, or to sign up for his free e-newsletter Small Business Success Secrets!, visit his Web site. Have a question for Steve? Send him an e-mail.