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Mistakes I’ve Seen Entrepreneurs Make

April 11th, 2007 by shawn · 1 Comment

I’ve worked for small business owners and I have been a small biz owner myself. As an entrepreneur I have made costly mistakes, and as an employee I’ve observed a lot of stupid things business owners do. Following are a few of the more recent ones I’ve observed. The offender? A local business owner who just closed up shop. I saw it coming.

Not heeding advice. If you need help in making decisions, asking for advice is a wise move. Not listening to your advisors is not wise – especially when an advisor has a proven track record as a successful businessman.

Making rash decisions. We’ve all heard things like, “The sign of a strong leader is the ability to make decisions.” Maybe that’s true – if you’ve got knowledge to back up a decision. Otherwise, you’re basically taking a gamble if you make a random decision. Make sure you make informed choices; don’t decide just for the sake of deciding.

Inconsistency. You want to instill confidence in customers, employees, and your peers? Be reliable. Be responsible. Be consistent. This means you can’t change your store’s hours on a whim. It means you can’t change your prices based on your latest ideas on how to squeeze more profits out of sales. It means you have to stick with your plan.

Not cutting losses. Just like a gambler who thinks he can win it all back with just one more game, don’t be a foolish business owner who pours more time and money into a losing business. If the writing’s on the wall and the end is in sight, it might be best to just shut it down. Otherwise, keeping a losing business operating will bleed you dry.

Unwise hiring decisions. The person you hire will either make you money or cost you money. Hiring isn’t always easy, and picking the right person isn’t always a clear choice. But keep in mind that it’s best to hire character if the choice is between talent and character. And if the choice is between skill and intelligence, pick skill. You can’t train someone to have character. And if someone is intelligent, they can pick up skills they need on the job.

Shady ethics. Be honest, straightforward, and upright. Keep your word. Be honest. Don’t do anything you wouldn’t want your momma to find out about. If you’re shady, dishonest, or push the edge of what is morally or ethically acceptable…I hope you get the same in return from someone else. What goes around does indeed come around.

Refusal to learn. You should know how your industry works. You should know your business at least as good as your employees. And if you don’t, you should be willing to learn. Why else would you enter a business unless you’re going to immerse yourself in it? I’ve seen business owners who weren’t willing to read books, read websites, or even sit down and listen to instruction regarding aspects of their field of business! There’s no way to beat competitors without learning what they know.

Laziness. Starting your own business is all about devotion – at least in the beginning. You have to put in a lot of hours, most likely. But not showing up at work, or closing down when you feel like it will result in disaster. You will be out of touch in no time, and your employees and your customers will lose respect for you and lose interest in your business.

Overspending. Eating out every day will eat up all your funds – yet I worked in a place where the owner bought lunch for the employees at least three times a week! It adds up fast. As a business owner, you need to be stingy with things like that – remember, a business is all about making money, not spending it.

This is a rather specific list of things I’ve seen one particular business owner do. He bought a successful small business and proceeded to run it into the ground by making bad decisions and managing with bad habits. While the experience of working for him was frustrating, one thing I value from the experience is that I learned what not to do!

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    1 Comment

    Comment by D
    2007-05-21 15:43:08

    Very Amusing – I bet you could add 5 pages to this :-)

    One important one is Bad Bookkeeping – using that old misc. column

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