by Rana DiOrio, Founder & CEO of Little Pickle Press
As I conducted my research to write this post, I turned to my friends for help. I sent an email to 25+ friends who are former clients, serial entrepreneurs, and/or early-stage investors. Before I hit “send” on the email, I reflected upon the group and the history I shared with its members. I smiled thinking that at one time I gave some of them advice—either in my capacity as an attorney, an investment banker, or an investor—about how to build their companies. Now, I’m the entrepreneur, and I enjoy a whole new appreciation of the journey entrepreneurs take to make their businesses successful. I shake my head at the Rana who gave advice without ever having walked in the shoes of the recipients of that advice. I am older and wiser and more humble these days. I feel as though I can now offer this post from the perspective of one who walks the talk.
Accordingly, here are The Top 10 Mistakes Entrepreneurs Make:
10. Thinking or acting like a small business. For example, printing cheap business cards, using a home address as an office address, chasing investors around at entrepreneurs' meetings, etc. Think BIG. Then, be BIG. [NOTE: We just published a children’s book about this topic. Please check it out here.]
9. Transmitting anything with errors in it. Nothing should leave the company unless it is perfect—no typos, no errors, and no omissions. This goes for phone calls, emails, marketing materials, letters, invoices . . . everything. As one of my friends said, “Nothing screams ‘loser’ like getting a brochure with mistakes in it.”
8. Hiring ahead of your needs. Hire as few people as possible and pay the good ones more to do more. It is far better to pay someone 150% of what they should be making if they're doing the work of two people. Attract and retain people who are resourceful and hard-working and reward them for it.
7. Losing people you need over money. If the person is critical to the business, then pay them what they're worth. It hurts, but consider the alternative.
6. Not firing fast enough. Resolve hiring mistakes quickly and invest more time to make the right decisions in the first place.
5. Being vain. Luxurious office space, expensive furniture and artwork, traveling first class; these all cost money and add no value. Invest the money you want to spend on luxuries and trappings into growing the business.
4. Letting fixed costs creep up. Keep your costs as variable as possible. Most businesses that do not require a large up-front investment (e.g., capex, software development, etc.) will become profitable sooner, assuming that equity owners reduce/defer their compensation or make it variable with profitability.
3. Doing in-house what should be outsourced. Outsource just about everything that can be outsourced. This makes those costs largely variable and allows you to focus exclusively on doing what you should be doing.
2. Giving up equity. Equity in your business is precious, and you need to keep as much as you can.
1. Taking on too much. It is alluring to want to conquer the world by taking on too much geography, too many applications, too many product lines, etc. Stay focused on delivering one thing first, and do so with excellence. Once you have proven the business model, then you can expand.
Thank you to my friends, who have requested to remain nameless, for helping me to assemble this list. I am so very grateful to each of you not only for your insights, but also for the history we have shared to make this list so meaningful.
As always, we welcome your comments and suggestions. What pitfalls can you add to this list?Photos courtesy of stock.xchng