It is a good idea have at least one external mentor who you can turn to from time-to-time to get second opinions on your strategies and directions.
This is particularly useful as they don’t work in your business and so are not emotionally attached to what you are doing. They will be able to look at your business from an outsider’s perspective, and often with a clearer view of the big picture.
Following are some common mistakes made time and time again by start-ups. Think about these points as they might apply to your specific business.
Forgetting the importance of cash flow – Many companies with great products, great people and great prospects go out of business each year because they don’t pay close enough attention to their cash flow.
Even profitable businesses can hit a cash crunch and lose everything. Nothing is more important than watching your cash every minute of every day. Spend time early on developing good cash-flow management and forecasting habits. Once you can see cash-flow problems coming six to eight weeks out, you’ll have time to do something about them.
Lack of clear direction and focus – It’s imperative to know what you do (and what you don’t do) and always communicate that message to customers. It’s easy to lose your focus, particularly when sales are down and you see an opportunity to make a few bucks on a different product or service.
Too many overheads – This is a real killer, and it’s hard to guard against because it sneaks up on you. When things are going well, you’re likely to forget last year’s hard times and assume business will always be like it is now.
You’ll be tempted to buy that new building, hire extra employees, buy new furniture and purchase nice custom paintings for your lobby. Then the business hits a down cycle, and you can’t make your payments. While you were out spending money, the more experienced entrepreneurs were making do with their old desks, worn carpeting and rented office spaces.
No commitment to self-education – Commit yourself to reading books and magazines and listening to audio tapes. Long-term educational commitment is hard for most people because the feedback loop is so long.
It often takes a year or more of hard work before you start to see the benefits. Once you get there, though, you’ll start to think more clearly, understand more of what you see and read.