Conventional wisdom: Hard work pays off
On the contrary: Gerbils work hard, too--and they don't get anywhere
When you've been in business as long as I have, you develop a sixth sense about start-ups. I can't turn it off--a new coffee shop, book store or restaurant will pop up in my hometown, and my wife and I will drop in. The space is inviting, the owners are genuinely interesting people, but before I leave, I've noticed the fatal flaw in the business plan.
They all seem obvious in the eleventh hour, but most owners fail to see the holes in their own thinking before it shuts them down. For anyone who's willing to listen (even though most people aren't)--consider these five common traps that small business fall into.
1) Getting Stuck in Your Space
Everyone thinks their ideas will catch fire, but few people actually plan for it. All the popularity in the world won't turn a coffee shop with five tables, no parking and no kitchen into a lucrative business--you just can't sell enough lattes out of that space to sustain yourself. If six months of coffee sales are strong, think about a plan for food or expanding into a bigger shop.
2) Trying to Go It Alone
I don't care how hard you work: one person can't run a business alone. Long hours and sacrifice are part of small business life, but eventually you'll get sick, have a meeting or need a vacation (ha!). Without a reliable staff, you can't plan for emergencies, and you limit the amount of work you can complete. I took this route early in my career, and my only saving grace was that I was young enough to try again.
3) Blowing Your Budget on PR
When you're first starting out, don't spend half your budget on third-party PR and expensive print or web advertising--just figure out who you can talk to for free. Bust your ass getting to know local reporters and editors at trade publications. If you sell farm equipment, offer to write an article about your product for a national farming magazine. If you sell coffee, convince every reporter in town you're the go-to expert on coffee. The ability to do your own PR also connects back to hiring staff--instead of answering phones, you can put in your extra hours behind the computer.
4) Blaming Your Customers
A lot of owners blame their business failures on the public, saying "no one in this town appreciates quality" or "no one supports local businesses." Those may be true, but that line of thinking kills your career. Failure is one of your best tools as a business owner--it beats an MBA any day. As painful as it sounds, you have to stop blaming the outside world and examine the problems with your model, your math and your leadership.
5) Letting Your Failure Drag On
Sometimes things just don't work out. Before I owned a successful business, I owned a so-so business--and I had to make the choice to kill it. There's a point at which you have to recognize "I can't do this," but when you've invested your own time and money, you lack perspective. Take it from me: After one big failure, you get over the shock of it. It teaches you a little humility and gives you a thicker skin.