5 Things You Should Never Do When Starting a Business
It’s exciting! Exhilarating! You are in the process of putting your dream into action – the pen to the paper. Clients are starting to come in, and your work is starting to bear fruit. Your new business is beginning to take off. But, as most experienced business owners will tell you, things can come crashing down very quickly if you are not prepared.
Here are some ways that you can fall off the edge faster than a 9-to-5er’s weekend.
Some of the best small business owners and rat race escapees I know don’t drink alcohol. At all. In fact, the less you drink, the better off you will be. Why is this?
Alcohol is a depressant. It acts by slowly eroding you energy and confidence away over time. And I’m not talking about the “confidence” you get while inebriated at a drunken college party in order to talk to the attractive girl from your French class. I’m talking about your confidence in yourself. The less control you have in your personal life, the less control you will feel you have over your business. Alcohol eats away at control.
Sure, a little bit is ok. But you should probably never use alcohol as a reward for a hard day’s work. If you are doing this, stop. Don’t dull the natural “high” you get from working hard and seeing your business grow by drowning yourself in a depressant that you are labeling as a reward! It’s nothing more than a crutch, and it will slow you down in time.
2. Be Available 24-7
This is a huge mistake, and a sure way to burn out eventually. Why did you start a business in the first place? One of the reasons was probably so that you had some control over your time. You were tired of giving away 40 hours of your week to your boss.
So why should you give away all your time to your clients?
Set some boundaries. If Mr. Jones calls you at 5:30pm in the evening and wants to chat with you about sales leads until 9pm, tell him that you are “open for business” until 6:00pm. Be firm about it. Don’t fidget and say, “well, I’m sorry.. it’s hard for me.. with the kids and all…” No. Just lay down the line. (Whatever your line may be!) People will be understanding, and you will be less likely to want to stick your head in the sand after awhile.
And ostriches don’t make good business owners.
3. Be Disorganized
Good business owners, entrepreneurs and the self-employed, for lack of a better term, have all their cows in the correct barn. That is to say, they have their ducks in a row.
If you are going into business for yourself, you need to keep track of everything you are doing. Even if it takes an additional hour each day, it is worth the extra time. Make sure that every transaction you make, every project you take on, and every interaction you have with a client is recorded. Put together a good invoice template and use it, even if you aren’t billing much for the project or product.
Why is this essential? Murphy’s Law will happen. You will at once point or another, need to go back over your records to find that transaction that took place between you and Mr. Jones to prove to him that he has, in fact, not yet paid you. Or you will get audited (self-employed individuals are more likely to have this happen than those who collect a steady paycheck.)
So if your filing system looks like something out of the movie Twister and your tax information is more of a daydream than a readily, you need to take action, or you will run into problems.
4. Refuse to Separate Your Business From Yourself
Check out my article: Separating Your Business From Yourself for more information on this common problem. You are not your business, any more than your dog is you.
Your business is something that you perform for others. When your business makes money, think of “taking this money” as “paying yourself a salary.” If you are just cashing your clients’ payments and taking them to Dairy Queen for ice cream, you need to make some changes. Of course, when you are just starting out, it is ok to do this occasionally. But if you are like me and running a serious business (or plan to run one) you need to have a separate account for your business. It is also strongly preferable to have a tax account that links to your business account.
If you are unsure how to do your taxes on your own, talk with an accountant or simply go to your local bank and tell them you want to open a business account. They will be familiar with the tax rates in your state/country, and can help you get started.
5. Put the Cart Before the Horse
Also known as skydiving without a parachute, or putting ketchup on your hot dog bun and then eating the hot dog before putting the actual hot dog on the bun, far too many people make this mistake.
They are so excited about their new business, that they start doing the work and pay little attention to planning and barely give any consideration to their time/finances.
While you don’t need to write out an actual business plan in all cases (though it helps), you should definitely sit down, take an honest look at your finances, an honest look at how much time you can devote to your new business, and get a general idea of how you want to proceed. If you don’t have the money required to begin, perhaps you can borrow some, or work a bit longer at your present job before devoting the time. But give it some careful thought! Don’t just jump in the ocean and hope it isn’t deep.
All good business owners are adaptable and pen to things going wrong. If you are making any of these mistakes, or feel that you are going to have a difficult time correcting them, it isn’t the end of the world. You can still run a great business. But it’s important to be mindful of some of your weaknesses so that you can take steps to work through them.
Nobody is irreconcilably limited by their vices!
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Victoria February 23, 2010 at 9:17 pm
I like your site…thank you! I’m glad to come across it. You have a good sense of what it takes to make life real and I appreciate the practical and yet respectful way you offer us all information.