Category Archives: entrepreneurs

Evil greedy entrepreneurs

Reinforcing the stereotypes

There is currently a lot of angry rhetoric around the Liberal government proposals for tax reform related to small business. “Trying to ensure fairness for the hard working middle class,” is their oft-claimed objective. “Removing corporate tax loop-holes only available to the wealthy.”

greedBut the policy debate quickly deteriorates into reinforcing preconceived stereotypes of the evil greedy entrepreneur ripping off the poor exploited wage slave. Critics of the proposed reforms react with their own stereotypes: pitting comfortable over-paid socialist civil servants against noble small business owners that are the engine of economic growth and prosperity for the whole country.

Unfortunately, too much of the raging rhetoric just reinforces the stereotypes.

If we can all be more tolerant and understanding in other cases of biased stereotyping, “Of course, they’re not all like that,” then why not for politicians, bureaucrats, and businessmen. They’re not all driven by ignorance, prejudice and self-interest.

Dealing with real problems is complicated and needs more than a political quick fix. The Liberals are right when they say it isn’t easy, but that is no excuse for doing it badly. A poorly conceived and poorly communicated tax reform package does not help improve the fairness of the system or the understanding of proposed changes.

Be better. Do better.

Your Uncle Ralph, Del Chatterson

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This article is an extract from Uncle Ralph’s, “Don’t Do It the Hard Way.”  Read the book.

Too EntrepreneurialToo Entrepreneurial, it’s not a good thing

Brian was chairing again at the e2eForum meeting, but he had a look of concern; unusual for him, as he was normally confident and upbeat.

Gesturing to the flipchart, he said, “These are the issues that are starting to wear me down. Mostly because my two senior managers in sales and project management are starting to tell me I’m not entrepreneurial enough.”

We looked at his list of discussion points.

Too Entrepreneurial

  • Opportunistic
  • Optimistic
  • Impatient
  • Confident
  • Decisive
  • Creative

He added, “Uncle Ralph, when we were working together on my original business plan, you warned me about the risks of being too entrepreneurial. These are the points I remember and I thought we could discuss them today in the e2eForum.”

“But they all look good to me,” said Stan, “my father was always pushing me to do those things.”

“It all comes down to balance,” I said, “Balancing the entrepreneurial instincts and drive with the well thought-out strategic planning and analysis that help you make good decisions.”

“Let’s go through the list,” said Vivian, keeping us on the agenda.

I opened by explaining my perception that although certain characteristics of entrepreneurs are necessary for them to be successful; too entrepreneurial can be a problem for the business.

I went over the points that I had previously discussed with Brian while we worked on his business plan and he was bubbling with entrepreneurial enthusiasm. My intent was not to dampen his energy and enthusiasm, but to provide some perspective on the risks. 

Too opportunistic

It can be hard to resist every potential sale or customer opportunity that is presented to you, but the successful entrepreneur builds the business by remaining focused on the strategic objectives and the agreed action plan to get there. Time and resources are easily wasted on chasing rainbows, if you are not sufficiently selective and insist on sticking to the plan.

Both current customers and new prospects will continuously presented unexpected opportunities. If they are asking for it, you should do it, right? Well, maybe not. Can you do it well? Profitably? Better than the available alternatives?

Your Go/No-Go decision should be based on two strategic requirements: leveraging your competitive strengths and building long term business value. Those are the two selection criteria that will keep you focused.

Too optimistic

It is important to be optimistic and think positively, but a little paranoia may be wise too. Remember the chairman of Intel, Andy Grove, titled his memoir Only the Paranoid Survive. Mark Zuckerberg has been credited with the same mentality in driving the astonishing growth of Facebook. Keep a wary eye on the market and monitor your business performance constantly. No news is not good news; you’re flying blindfolded. Don’t miss or ignore the warning signs of bumpy weather approaching. 

Too impatient

Don’t expect too much too soon. It seems like everything takes longer than it should and most entrepreneurs have high expectations of themselves and their team. But don’t keep changing the plan or trying something new just because you’re not there yet. If you are making progress and the end goal is still valid, don’t give up too soon. 

Too confident

Entrepreneurs usually have great confidence in their instincts and their intelligence. The mistake is to neglect or ignore market feedback and analysis of the facts. Also being action-oriented, the tendency is to react and ‘fire’ before the ‘ready, aim’ stages are complete. Painful surprises can result. Temper your self-confidence with a little humility – ask for help and get the input from others before you rush ahead. 

Too decisive

Entrepreneurs are expected to be decisive and demonstrate leadership. But both can be overdone – deciding too quickly and providing too much direction so that employee input, initiative and creativity are stifled.

Often the decision does not need to be made quickly and the implementation will go more smoothly if time is taken to assess the feedback and answer the questions before commitments are made and the wheels are put in motion.

Back in the `80`s, Japanese management style was the model of success and one of their recognized tactics was to talk and talk and talk about the solution before implementing it. The result was much smoother and faster implementation than for the stereotypical macho decisive American manager who decides quickly and starts implementation without sufficient prior consultation with those affected.

Too creative

Many entrepreneurs are driven to ‘Do it my way’; that’s why they love running their own business. But sometimes alternatives have not even been considered and a better way exists. The creative solution may require improvising and learning on the fly, but maybe the best solution is sticking with what works, until it stops working.

Another mistake is staying too long with a solution and neglecting to evolve and grow by optimizing systems and processes and installing the best practices and latest technologies available in the industry. Not everything needs a creative new solution unique to your business. Maybe you’re not that special.

I summarized for the group. “Those were the points I had discussed with Brian and my assessment of the risks of being too entrepreneurial; all these mistakes can lead to serious difficulties for the business.”

Dave added, “It does help to keep in mind that some careful analysis and planning are important to offset the tendency to make decisions based on instinct and past experience. I’ve had to make some quick decisions recently that I’m now going back to and will take another look at.

“See you all in a month and we can talk about what changes we have made to avoid being too entrepreneurial.”

Your Uncle Ralph, Del Chatterson

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From business launch to owner’s exit

Bplan strategyYour Business Plan is an essential management tool that is too easily under-estimated as a useless bureaucratic requirement to apply for financing. “It would be easier if they just said No!”

My own experience with business plans has led me to the conclusion that became the sub-title of my book, The Complete Do-It-Yourself Guide to Business Plans:

It’s about the process, not the product.”

Do not make the mistake of focusing on filling in the blanks to create a Business Plan document. The real value for entrepreneurs in preparing a Business Plan is the process of involving your management team in the assessment of the market, study of competition, developing a business strategy and testing the financial consequences of different scenarios and alternative plans.

My first Business Plan was 30-years ago, when I started TTX Computer Products (a simple one page summary and first year budget), followed by a more formal Business Plan when we applied for a line of credit. It helped us get the first $50,000 and the process eventually got us up to loans of $4,800,000.  My experience continued with other ventures and dozens of projects for clients in a wide variety of businesses. From start-ups through business expansion plans to successful exit strategies.

The most important lesson?

The value to an entrepreneur or business owner comes from the process, not the document.

Use the business planning process to understand the market, develop a strategic plan and test alternative scenarios. Then continuously review and revise the plan based on ongoing market feedback and actual results.

It’s a continuous process: Like any other road map, it should be consulted regularly. Do we still have the same destination? Are we on the right course? In the best vehicle? With the driver and passengers all in the right positions doing the right things?

What are the essential elements?

The objective is to prepare a document that describes the business opportunity, then defines the strategy, concept and business model to realize that opportunity and the operating plans to succeed as a sustainable long-term business.

The important steps in the process:

  1. Analyse and understand the market, the opportunity and the competitive landscape.
  2. Develop a strategy and action plan to realize the business opportunity.
  3. Test alternative scenarios, strategies, operating plans and the potential financial results.
  4. Document your final decisions on strategy and operating plans and the expected financial results.

The final Business Plan will have three parts – a description of the plan, the financial projections, and the supporting documents.

Who needs one and when?

A solid Business Plan is not just for start-ups seeking financing. It’s also for existing businesses to launch a new project, a new product, or enter new markets. Every business should have a documented strategic plan with measurable objectives that can be shared with management and employees, business partners and sources of financing.  The documented Business Plan is also an important tool for preparing an exit strategy or management transition plan for businesses that are at that stage in their life cycle.

What are the biggest mistakes made in Business Plans?

Entrepreneurs often put too much focus on filling in the blanks of a template without providing solid data and analysis to validate the strategy and the financial forecasts. The plan may be missing the persuasive arguments on how you will succeed based on competitive advantages and your unique knowledge, skills, experience, contacts and resources. Do not neglect the sincere language that will attract believers to your stated mission, vision and values.  Prepare to answer the tough questions, especially recognizing and responding to the risks and uncertainties.

The most important recommendations in The Complete Do-It-Yourself Guide to Business Plans?

First, you do not have to “Do-It-Yourself,” but you should know what will make it successful, so that you can provide direction to whoever is helping you prepare a Business Plan. Be prepared to defend the strategy and the numbers in your plan. Remember the objective is to prepare a plan that will generate confidence and enthusiasm in yourself and in others and that will serve as a guide to managing and monitoring performance for a successful long-term sustainable business.

Happy planning!

Your Uncle Ralph, Del Chatterson

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Responding to Challenge #1:

Strategic Leadership & Management Effectiveness

Keep your Balance

balanceIt is easy for owner-managers to get pre-occupied by the daily demands for attention – chasing opportunities, resolving customer complaints, managing employee performance, satisfying business partners, governments and the bank.  Stepping back to look at the big picture and assessing performance against the original strategic plan is easily neglected.

That remains the entrepreneur’s No.1 Challenge: balancing the need for strategic leadership with the demands for operational effectiveness.

Too busy fighting fires to work on fire prevention?

To succeed in building a long-term sustainable business, it is essential that owner-managers find the appropriate balance in applying time, effort and resources to both strategic leadership and operations management.

Two issues, three steps to success

My approach to managing that balance is to apply the same three steps to each issue.

Strategic Leadership

1. Assess performance

Continuously assess market conditions, customer feedback and the competitive landscape. Check that your intended strategic positioning, branding and corporate culture are in line with current customer and employee perceptions.  Confirm that you are correctly matching your strategic and competitive advantage to market opportunities

2. Revise the plan

Review and revise, if necessary, your strategy, concept and business model.  Update your Business Plan and marketing communications strategy.

3. Make improvements

Launch the new plan internally and provide strategic direction and support to the management team. Prepare new marketing communications and sales tools and take them to market.

Management Effectiveness

1. Assess performance

 Regularly assess operating and financial performance by monitoring key indicators against your plan, industry averages and the best performers in your business.Survey employees and customers for satisfaction levels and feedback on areas for improvement.  Maintain current and effective employee performance reviews for management and staff.

2. Revise the plan

Identify deficiencies and set new objectives for performance improvements. Update the Business Plan and internal performance objectives for management and staff.

3. Make improvements

Define and develop improvement projects and provide necessary management support and resources to achieve the objectives.

A simple process, but not easy. Achieving balance in managing business strategy and effective operations is still a challenge.

But worth continuous attention.

Your Uncle Ralph, Del Chatterson

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9781496932259_COVER.inddThis article is from Chapter 4 of Uncle Ralph’s, “Don’t Do It the Hard Way”.  Read the book.

Challenge #1: Strategic Leadership + Management Effectiveness

Start with a plan.

 As we started our e2eForum on a bright sunny spring morning, this was on the flipchart:

The Entrepreneur’s Challenge:

Strategic Leadership + Management Effectiveness

It is my favourite theme and I had been asked to decide on today’s discussion topic, so there it was. Some around the table had heard me rant on this subject before, so I was trying to approach it a little differently.

“Today I’m going to start by admitting to you my own biggest mistake as an entrepreneur – failing to continually think strategically. I was too often pre-occupied with operating issues and short-term problem solving. Stuck in the old dilemma of too busy fighting fires to ever work on fire prevention.”

“This was especially true in my first business, computer products distribution. There was so much detail to keep on top of – markets and technologies, customer service issues, managing employees and learning everything I had to know as a new entrepreneur about the running a business – from accounting systems and freight rates to lines of credit and payroll deductions.”

“I had all the usual excuses for being drawn into the daily crises and never getting back to the drawing board to review the original strategic plan and see if we were still on track. To be honest, our original plan was not very strategic and never looked past the first two or three years. It was only focused on making our numbers, not on strategic positioning and managing our important business relationships. We made good short-term decisions to maintain profitability and win our share of competitive battles, but did not effectively protect ourselves from conflicts with our major suppliers and were not prepared for the rapid decline in profit margins as competitors flooded the market.”

“We started business in the mid ‘80’s when IBM personal computers and the clones and compatibles were first landing on desktops everywhere – in offices, schools and homes. With our one primary product, computer monitors, we were initially competing with only about six major brand names and four other regional distributors.”

“Our customers were primarily the local computer stores that were on every second street corner and in every shopping centre. We were selling a few hundred monitors a month and average profit margins were at 12% to 14%; pretty healthy we thought. But high profits and fast growth brought a lot of competitors into the market. By the mid ‘90’s we had over forty competing brand names and at least twenty competing distributors. Profit margins in distribution slid to about 4%; no longer healthy. Our volume was up to ten times over our second or third year, but net profit was the same and we now had huge risks in inventory and receivables.”

“That’s when I made the decision to enter into the merger which would have helped us to diversify our product mix and customer portfolio and reduce the risks. Unfortunately, the merger didn’t work so we wound it down and I subsequently left the computer hardware industry about two years later. Very quickly after that consolidation eliminated most of the players in the personal computer market – only a few major brand names, three large multinational distributors and three or four national retail chains remained by the year 2000.”

“Any survivors from that era had to be very good at re-positioning their businesses to keep up with the rapid evolution of the computer business.”

“Your own business may not see rapid change like the computer industry, but I’m sure that whatever business you are in, technology and the Internet continuously affect how you do business. You have to adapt to keep up with changing competition and new customer expectations.”

“Don’t make the mistake I did of getting lost in the operating details and neglecting to raise the periscope and scan the horizon for oncoming threats or opportunities. Be prepared to respond.”

Keep your head up

“I do try to keep aware of what’s on the horizon,” said Dave, “but sometimes I have very limited choices available for my response. We expect our manufacturers to keep up with the technology and the competition and our bike dealers to do a good job of attracting customers and making the sale. As the national distributor, we provide the pipeline to market, but we need the people at both ends to work with us.”

“And it is true,” he added, “even if we’re in ‘old economy’ traditional businesses, we all have to keep up with technology – both to remain competitive and to rise to new customer expectations. The devices and applications all keep getting cheaper, easier to use and more effective at delivering the results. We simply cannot afford to stand still – the competition will beat us and the customers will leave us if we don’t keep sharpening our tools.”

Looking around the table it seemed we all agreed with Dave. Strategic vision and leadership need to be constantly applied to daily decision making.

Lack of strategic direction, in my opinion, may be the biggest mistake for entrepreneurs and can be fatal to the business.

Your Uncle Ralph, Del Chatterson

Read more Learning Entrepreneurship Blogs. 

Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, “Don’t Do It the Hard Way” and “The Complete Do-It-Yourself Guide to Business Plans” Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

 

 

 

 

 

Evolution of Do-It-Yourself Marketing

confused-man1Don’t do it all yourself

It struck me recently in a meeting with two young entrepreneurs that we were struggling to do it all ourselves, when we should instead be calling on professionals who actually have the relevant expertise and experience to get the best results for the minimum expense.

Especially in social media marketing.

It looks easy, but it’s not

We’re all busy Tweeting, Facebooking and connecting on LinkedIn, thinking we know what we’re doing. It all seems a necessary and obvious part of our marketing programs. But are we accomplishing anything? Raising awareness, building our brand, attracting prospects and future customers? Maybe not.

Much like running a restaurant or retail store, consumers recognize good versus bad performance, but that does not mean they know how to succeed at it themselves. It is never as easy as the experienced professionals make it look. It is usually better to pay for advice to get it right the first time, instead of learning from the painful and expensive mistakes that may result from doing it ourselves.

We’ve been making the same mistake in do-it-yourself marketing for decades. Back in the 80’s, it was fun to play with all the available fonts and graphics in the new desktop software and then blast away with junk faxes. Not so much fun to discover that clients soon went from impressed to annoyed. Not the reaction we were going for.  But we repeated the mistakes with junk e-mail. Eventually, we learned to be more respectful of inboxes and social media connections to build and retain customer loyalty and engagement.

We have done the same with other marketing initiatives, trying to imitate the best. It looks easy, but it’s not. Choosing a brand name, slogan, graphics design, writing copy on websites and brochures. It all seems acceptable to the entrepreneur, until an experienced professional points out the lack of a clear, consistent strategic message directed at a well defined target market and customer.

Use the professionals well, help them help you

Don’t make the classic mistake of the entrepreneur who prefers to do it himself badly, rather than pay for an expensive professional. Entrepreneurs by nature are curious and self-confident and will certainly try it on their own. Just remember to stop when you have learned enough to be a better, more knowledgeable client so that you can direct the experts to get the results you want within the budget you can afford.

Try it, learn, and then get good advice to do it better.

Your Uncle Ralph, Del Chatterson

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Share the love and the joys of life. ‘Tis the season.

Ignore the headlines, Donald Trump and ISIL for a few days. Set aside your worries about the declining dollar and tumbling markets. Find the time and the means to celebrate the joys of life. Focus on the people close to you; friends, family and business associates that also need to share the love and the joys of life.

It can be a stressful time of year with all the conflicting objectives and priorities: last chance to meet year-end business objectives, finalizing plans and budgets for next year, personal pressure to spend time with unfamiliar family members, and expectations for unnecessary and unappreciated gifts. It can be hard to get in the spirit of the season.

So it’s up to you to decide on what’s important at this time of year. The holiday season can be a distraction and temporary set-back to pursuing business goals and objectives or it can be an annual opportunity to celebrate and confirm your values and beliefs as an enlightened entrepreneur. Now is the time to focus on the non-monetary objectives: doing better for your employees and customers, your suppliers and strategic partners, the community and the planet.

Be creative and engage all your staff in committing to projects and activities that show theyHappy employees support each other; the people who are your customers and suppliers; your community and the planet.

Share the love and the joys of life. ‘Tis the season.

 

Wishing you and your family all the best of the season,

Del Chatterson, your Uncle Ralph

skydivingLook before you leap

I often say, “Starting your own business is a lot like sky-diving – it seems like an exciting idea, but you’re not likely to do it until you’re pushed out the door.”

In my own case, I had literally been pushed out the door of a technology company (AES Data) that was winding down and my number came up. Not a surprise, since I had spent the previous nine months closing facilities and letting people go, but it was a painful experience, nonetheless.

I quickly had two other corporate job offers from Nortel and Rolls Royce, both with similar job descriptions and compensation packages, but I decided it was time to take care of my own career plan and not let someone else decide whether I had a job and what I was doing next. Besides, with an MBA and lots of experience, I was ready to prove that I was at least as good a manager and businessman as the people I had been working for. So I went back to consulting on my own and started to explore opportunities to start in business for myself.

That’s when I met the owners of TTX who were looking for a distributor of their computer peripheral products in Eastern Canada. That appealed to me because it matched my interests in technology and I had good credentials in managing the distribution side of a business. So I quit consulting, put in some cash and agreed to start with no salary as we opened a joint venture in Montreal. It was a great experience from the first day.

It was only much later that I recognized the two important checklists to go through before you launch your business.

First,  my short list of the Characteristics of a Successful Entrepreneur

  • Energetic, competitive, independent, confident, persistent, action-oriented, decisive.
  • Passionate, persuasive communicator.

If you don’t have them all, then you better include a partner in your plans.

Don’t quit your day job yet

And before you leap into the unknowns of entrepreneurship, you need to go through another checklist, starting with your Basic Defensive Interval. (Simply: How long can you last without income?)

The “Before you Launch” Checklist

  • Skills, knowledge, experience, and contacts relevant to your business plan.
  • Expectations and preferences for the entrepreneurial lifestyle – work routine and environment, prestige and compensation, work/life balance.
  • Personal strengths and weaknesses that will help, not hurt, the business.
  • A healthy foundation – family, physical and financial. Solid not shaky.
  • Strategic resources in place – partners, suppliers, facilities, key customers and employees.
  • Financing for start-up – including your Basic Defensive Interval and the first few months of negative cash flow.

If you can’t put a checkmark with confidence in every box, then you better try harder – recognize the deficiencies and fill in the gaps. Maybe you require more time to develop your skills and get more relevant experience or to beef up your foundation and strategic resources before launching.

 Look before you leap

(An extract from “Don’t Do it the Hard Way” by your Uncle Ralph.)

It’s done.

I finally expanded the quick 10-Minute summary into a Complete Do-It-Yourself Guide to Business Plans.


Including:

  • A clear concise 50-page Guide that describes all the requirements for a great Business Plan .

  • Valuable ideas and information on the personal and strategic business decisions required before you start

  • Recommended Templates for your Financial Projections

  • A quick summary 10-Minute Guide to Business Plan basics

  • An actual sample Business Plan that delivered results


Check it out at: http://www.diybusinessplan.com/DIYcompleteGUIDE.htm


Why Do-It-Yourself?


As a management consultant, I have often been hired to help with Business plans. (As an entrepreneur, I’ve also written a few of my own.) But if you hire someone, it still needs to be “your” plan. Nobody can go away and write it for you.


It needs to reflect the entrepreneur’s passion, competence, knowledge and commitment to the business. A consultant can help with the planning process, words, numbers, and presentation, but investors, lenders and strategic partners need to know the entrepreneur behind the plan, not the consultant.


Learn how. And do it yourself.

The Seven Biggest Mistakes that Entrepreneurs Make

Which ones are you making? How can you avoid them?


I was recently asked to do a presentation with my associates at a breakfast seminar for business clients. We had arrived at the title “Seven Biggest Mistakes that Entrepreneurs Make” before I had the list prepared, so I decided to do a survey of entrepreneurs and their advisors to complement my own ideas. The feedback was enlightening.


Here are some of the suggested “Biggest Mistakes” from the survey:
“Cash flow, cash flow, cash flow”, “Afraid of Marketing and Sales, “Reactive, not strategic”, “Not delegating”, “Hiring too fast, Firing too slow”, “Not focused”, “Communicating too much, or too little”, “Not using consultants” (That last one was from the consultants, not their clients!)

The feedback also reinforced my own experience that it is OK to fail and make mistakes, as long as they are small, frequent, and early. It’s all part of the learning experience to get better. But big mistakes can kill your business.

Here is my final list of the Seven Biggest Mistakes that Entrepreneurs Make.

#1 Too Entrepreneurial
Certain characteristics of entrepreneurs are necessary for them to be successful. But if over-indulged they can lead to big mistakes. These include the tendency to be too opportunistic and not be sufficiently selective and focused; to be too optimistic and miss or ignore the warning signs; to be too impatient and expect too much too soon.

Entrepreneurs usually have great confidence in their instincts and consequently rely on “gut feel”. The mistake is to neglect or ignore market feedback and analysis of the facts. Being action-oriented, the tendency is to react and “fire” before the “ready, aim” stages are complete. Painful surprises can result.

Many successful entrepreneurs have achieved a lot based on their energy, charm, charisma, and persuasiveness, but then get caught by selling on personality, not on performance. Clients start to notice that expectations are not being met.

Entrepreneurs are expected to be decisive and demonstrate “leadership”. Both can be overdone – deciding too quickly and providing too much direction so that input, initiative and creativity are stifled.

“Doing it my way” often means improvising and learning on the fly, or sticking with what works, until it stops working. The mistake is in neglecting to evolve and grow by optimizing systems and installing best practices and latest technologies.

All these mistakes can lead to serious consequences, as a result of being “too entrepreneurial”.

#2 Lack of Strategic Direction

Another consequence of the action-oriented entrepreneurial approach is the tendency to get lost in the daily details and completely neglect the original strategic plan and objectives. The owner-manager soon becomes pre-occupied by operating decisions and all the demands on his time from customers, employees and the constant fire-fighting. It leaves little time for fire prevention.

This situation is worsened as the entrepreneur concludes that the best solution is “do-it-myself”. Not delegating to staff or using external expertise may seem like the least-cost solution, but probably undervalues the owner’s own time and expertise and does not lead to long-term solutions.

The entrepreneur may have good awareness of long-term strategic issues and had them in mind when the business was launched. But they are now neglected, and the original Business Plan (if there was one) is not documented, updated or shared.

Lack of strategic direction is listed here as #2, but may be the Biggest Mistake that Entrepreneurs Make.

#3 “That was Easy, Let’s Do It Again!”

Another common mistake that can have devastating consequences on the business is the over-confident entrepreneur who concludes, “That was easy, let’s do it again!” So he or she leaps into new markets, new product lines, or even a new business or investment opportunity.
It’s important to remember: Making money doesn’t make you smart.

Do you really know what you did to succeed? Or what mistakes and risks you avoided? Is now a good time to start something new? How much will the current business be impacted by new initiatives? Is your success really transferable?

Many successful entrepreneurs have made the mistake of jumping into a new venture – merger, acquisition, restaurant franchise or real estate investment – and blowing away the equity value they generated in their original business.
Another big mistake to avoid.

#4 Focused on Profit

Being focused on profit doesn’t seem like a mistake. After all, isn’t that the whole purpose of running a business? No, actually. As I explain to students in their first Finance class, the primary financial objective of any business is “to enhance long-term shareholder value”.
Many short-term profit-oriented decisions can hurt long-term value. Examples are many: cutting staff, maintenance or marketing expense; not upgrading systems and technology; accepting high credit risk or low margin customers; avoiding taxes, environmental or quality issues.

Most entrepreneurs are very focused on managing the bottom line by monitoring sales, gross margin and expenses. They always know those numbers.

But they are usually ignoring asset management, especially cash flow. The business may appear very profitable, but have constant cash flow challenges because management is neglecting inventory and receivables, in particular. And unfortunately it is not as simple as: Collect fast, Pay slow. Customer and supplier relationships can be at risk if cash flow issues force you to take that approach.

Managing the Balance Sheet also requires good management of debt and balancing short-term and long-term needs with short and long-term sources of funds.
And the Most Undervalued Asset doesn’t usually even appear on the Balance Sheet: Human Resources. That leads to Biggest Mistake #5.

#5 Neglecting Key Relationships

The key relationship for any business is the one between its owners and the staff. Management and employee communications are essential to business performance and often not managed very well. Key employees need to be recognized and engaged. Mistakes made with key employees can jeopardize the whole business.

Similarly, don’t make the mistake of being distracted by the most annoying and persistent customer. Your biggest customers are not likely the “squeakiest”, just the most important. Don’t make the mistake of letting them be neglected.

Do you need to squeak more yourself? Do your suppliers appreciate you enough?
Fast growth and profitability may be coming from one or two key customers or suppliers which can lead to over-dependence on their business. And your success may be convincing them that they don’t need you in the middle any more. Be wary.

Another key relationship not to be neglected: Is your bank a welcome and willing partner in your business? Remember “friends in need” have to be developed in advance.

#6 Poor Marketing & Sales

You know there is a problem brewing when you hear the entrepreneur explaining that “The product sells itself”, or “Price is all that matters”, or “Our Sales Reps need to do a better job”. These are signs of poor marketing and sales results. Usually the company is failing at both the strategic marketing level and at the execution of effective marketing and sales activities.

Not only are opportunities for profitable growth being missed, but the company may be on the downward slide to “out of business” without a well-conceived marketing plan and effective sales strategies.

#7 Distracted by Personal Issues

And finally #7 – Personal Issues that distract attention from good management of the business.
Personalities and their issues can seriously affect business performance regardless of whether they are owner, management or staff issues. Sometimes they are simply ignored until they become a problem. Sometimes they are a result of too much success and behaving like a rock star.

Family businesses in particular run the risk of favouritism and having family matters interfere with business success. Managing personalities and corporate culture are a particular challenge in family businesses.

In Summary, the Seven Biggest Mistakes that Entrepreneurs Make:




  1. Too Entrepreneurial

  2. Lack of Strategic Direction

  3. “Let’s do it again!”

  4. Focused on Profit

  5. Neglecting Key Relationships

  6. Poor Marketing and Sales

  7. Personal Distractions
Now the obvious question is: How to Avoid Them?

The answer is: Balance!

Each of these Big Mistakes is a result of the entrepreneur failing to achieve balance between opposing approaches and decision making processes. Avoiding these mistakes requires the entrepreneur and business owner to:



  • Balance the Entrepreneurial Approach with Analytical Input

  • Balance Strategic Vision with Operational Detail

  • Add the Head and the Heart to the “Gut Feel”

  • Manage for Long-term Value not just Short-term Profit

  • Keep Personal Priorities in your Plan but Out of your Business


I hope that helps you to grow and prosper in your own business and avoid the Seven Biggest Mistakes that Entrepreneurs Make.