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6 DON'T's When Starting Your Business!

challenges facing small businessesThere are a lot of paradoxes in business today and multiple challenges facing small business.

It is without question the easiest time ever to start a new business. Technology enables entrepreneurs to begin on a literal shoestring, what with cloud-based systems, tablets and smartphones, to say nothing of more young business people having grown up with that technology.

At the same time, it's probably never been harder to make a start-up successful than it is today.

There are more startups because it's so easy to start a company. Startups are competing for too little early growth capital. Due to people wanting immediate responses, communication is more difficult and costly. Between all of this, it requires an entrepreneur to sharpen his focus on what's important.

Previously, I've emphasized the importance of focus in the early going. But it's just as important, maybe more so, to not do stupid things that take away from that focus.

Challenges small business faceThe many challenges facing small business

So, as I am often a contrarian, instead of telling you the things to do to be successful, here's a list of stuff not to do, the especially dumb things - the 6 "don't's" that start-ups should avoid:

1. Don't create a business plan for a "make believe" business.

In short, early on, most business plans are a theoretical exercise as to how you expect the company to roll out. The objectives, market penetration targets & strategies, and tactics are for a business that will never see the light of day except in your imagination.

More often than not, you will pivot multiple times in the first six months, making all the work you put into it a waste of time. Instead, create a battle plan; one that's a living, breathing document that changes as you continue to learn more about your market, your prospective customers, and your product.

2. Don't create a complex capital or legal structure.

Nowhere is the KISS model more necessary than how you set up your company, both legally and financially. Get advice from your lawyer and your accountant, but stress with them, you want simplicity. You don't need a Delaware corporation if you're a solopreneur. Don't create three or four different kinds of stock if you never expect to have more than a couple of shareholders. And remember however you start out, you can always change it.  When it's simple to start with, it's easier to accommodate change.

3. Don't bring on partners unless you would marry them!

I know that sounds extreme, but that's the kind of rigor you have to go through when determining whether or not to bring in partners. Make sure the chemistry is right, they're bringing something to the table and don't get caught up in the moment of camaraderie and seemingly compatible viewpoints.

Like in a marriage, warts don't get better, later on. For example, if you've taken on a lot of the risk in the beginning then you find somebody who wants to share your equity and your profits but is risk averse, that is a recipe for disaster.

The wrong partners are just like bad spouses, tough and, potentially, very expensive to get rid of.

4. Don't wait until your product is "perfect."

Get your product into prospective customers' hands as soon as practical. An 85-90% product early, even with some deficiencies, gets you both potential cash and customer feedback, sooner, that can make the product, better, sooner. That last 10-15% often costs two or three times what the first 85-90% cost and usually take two to three times longer.

Cash, a new customer, and feedback trump perfection, every single time!

5. Don't make long-term cash commitments.

With their first major success in their new business, some entrepreneurs begin to believe their own "smoke" and start to make commitments like this early success might continue. I'm not saying you should be pessimistic, but your glass shouldn't be overflowing.

Be a harsh realist. A realistic outlook applies, especially, to leases, whether equipment or space. Don't do it!  No matter how much early success you achieve, continue to act as if you "might go under tomorrow," and manage your cash accordingly. Keep all commitments as short as possible, even though you might be paying a little more for certain things. You'll, hopefully, still be around when it comes time to re-up that commitment.

6. Don't introduce multiple products or services.

If you've paid attention to other stuff I've written you know I espouse three critical things for early stage entrepreneurs - market deep, not wide; more is not better it's only more, and because you can doesn't mean you should.

Basically, in the early going, keep it simple. Tightly focus your product or service on a niche market you can penetrate. And then just burrow in. Multiple products might mean multiple revenue streams, but multiple revenue streams, to become a reality, all need some element of marketing and sales to happen. Resources you probably don't have in abundance. Why would you diffuse your scarce resources?

Early stage success is a product of not doing the wrong things as it is of doing the right ones...maybe, more so. Keep these "don't's" firmly in mind as you roll out, and you'll avoid a whole boatload of trouble.

"The Entrepreneur's Yoda" knows these things. He's been there. May success be with you!

Have you been burned by any of the "don't's?" Please share your thoughts in your comments. It can help another entrepreneur.

If you like this post, by all means, share it with your networks and colleagues.


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