 Starting a small biz? 5 mistakes to avoidQ: I’m starting my own business and want to avoid the mistakes that newcomers make. Can you help? — Jessie A: Mistakes happen in business all the time, but it’s usually just after opening your doors that they can have the greatest impact. That’s when you have less money and room for error. The first thing I suggest is to check out Microsoft’s new Startup Center. It is full of great advice and covers everything from sales and marketing to advertising and financing and can help you get off on the right foot. It’s also smart to know what not to do in starting a business. Here are my 5 biggest startup mistakes to avoid: 1. Starting without enough money: It’s fair to say that most new businesses probably start with less than optimum funding. It’s also true that many start on a shoestring. While a few shoestring ventures survive and thrive, just as often, they crash and burn. Starting your new business without enough cash usually is a recipe for failure. Without sufficient capital you constantly feel restricted. You’re unable to try new things and too scared to take the risks or spend the dough necessary to succeed. How much do you need? Only your business plan can tell you that, but suffice it to say that you need enough money to:
Worst of all, insufficient capitalization leads directly to the second big mistake too many small businesses make: 2. Not earmarking enough time, money, and effort on marketing and advertising: Starting a new business is like being alone in a dark room: You know you are there, but no one else does. The only way to turn on the light and let people know you are out there, open and ready for business, is to advertise and market sufficiently. But too many small business owners fail to do so. It may be due to the reason above – insufficient startup capital – or it may be because they don’t really know what to do. Whatever the case, it is a huge mistake. Marketing and advertising are critical to your business, but never more so than in the beginning when every customer could be a new customer. (You can produce professional-looking marketing material with the Microsoft Office Small Business 2007 .) 3. Picking the wrong legal structure: There are three basic ways to structure your new business. It could be a sole proprietorship, a partnership, or some type of corporation. The vast majority of new small business owners go the sole proprietorship route because it is easy and inexpensive. It is also a mistake. The problem is that as a sole proprietor, you and the business are legally and financially the same. Business debts are your debts, as are business liabilities. However, as an S corporation or LLC for instance, the business becomes a separate legal entity apart from you. If things go south, your personal assets and credit will not be damaged. 4. Taking on too much debt: Yes, I said that it is a major mistake to start your venture without enough money, and that is true. But it is equally wrong to burden your venture with excessive debt. Sure that franchise looks great, but borrowing $1 million to buy land, pay the franchise fee, build out the store, redecorate, and buy inventory may not be the best idea. You will need to sell a lot of hamburgers to cover your monthly nut, let alone retire the debt in a reasonable amount of time. 5. Failing to brand: Many small business owners think that branding is a big business concept that does not apply to them. Wrong. Branding is probably more important to small business owners than anything else. A unique, identifiable, memorable brand helps set you apart in this sea of businesses and gives people something to remember you by. Branding your small business is not that difficult. It consists of:
The important thing is to know what can go wrong so it won’t go wrong. Let’s call it Murphy’s Revenge. 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.
|
|
