This is a guest post by Tom Becker. Tom works at Money Choices, one of the leading comparison sites in Australia. You can read some of his work on their company blog. Entering into a business venture of your own can be an exciting time in your life. A time filled with energy, optimism, and dreams of what lies ahead. And as you begin your road to business ownership, you might not want to consider the worst that could happen, however; it is often from the worst events that we can learn the most valuable lessons. There are plenty of lessons that you can learn from running a business. There are certain things however, that unfortunately you might learn better from failure. This is where learning from others’ experiences can be an invaluable asset to the successful operation of your business. Rather than make the following five mistakes yourself, you can instead read about them, learn, and insure that you avoid these costly missteps along the path to success.

It’s Not Fun, It’s Business

Running your own business can be a heck of a lot of fun for the first week, maybe even month, but then reality sinks in and you realize it’s also a lot of work. When first starting out, the excitement of leaving the daily grind or owning a piece of something that you can call your own can get the better of you. You’ve probably been thinking about how much greener the grass is on other side of the fence, and now that you’re there, you’re beginning to realize that it’s actually just as wilted. But now, instead of having a steady paycheck, health and retirement benefits, and a boss or manager to pass the buck along to when there’s a problem, you realize that the buck now stops with you. You pay for your own health benefits and retirement – if there’s enough money. You pay yourself – if there’s enough money. And even then, some or all of that paycheck might go back into the business. This isn’t to say that running a business can’t be enjoyable, but it’s not a life of leisure you’ve entered into, it’s a business. You don’t get to sleep in each morning, get to work when you want, and kick back at your desk to let the cash tumble in, and if you do, you probably won’t be running your business for long. You’ll likely be working longer hours, accepting more responsibility, and learning more new things than at any regular job you’ve had before and then things really get tough as the initial excitement of being out on your own wears off and this business venture becomes the new daily grind. In fact, this was one of the most difficult things I had to get my head round when I left the corporate world to start out on my own. I always knew there would be a lot of work involved, and I suppose I had deluded convinced myself that I was ready to step up and take on a much more demanding work load. However, I don’t think there’s much that can prepare you for the challenge of building your own company from the ground up. In the past I’ve found myself working ridiculous hours and it felt like I had given up on any semblance of a ‘sleep pattern’. Months slipped by in a blur of work with consecutive days of early starts and late nights working on adding products, dealing with customer care issues, trying to build some marketing momentum and trialling PPC campaigns. The world of owning and running your own business is as far away from the corporate world as east is from west, and it hit me like a lightning bolt! Of course there were times when things started getting on top of me, bills needed to be paid and money was tight – but with perseverance I clawed my way through it because I knew that something better was waiting for me on the other side. Old fashioned hard work, even if it was in pursuit of my dream, kept any grand illusions to a minimum and my feet firmly grounded in realism as to exactly how hard running your own business can be. This mentality will likely be key to grow almost any type of business into a success, and starting off without it can be a costly mistake.

Don’t Just Research, Test

Researching is easy. You analyze the statistics, study the business cycles, you read articles and trade magazines, familiarize yourself with the latest industry trends and related technologies, you review and study the competition, and you begin to see exactly how you would do things differently with your business. The problem with reading and understanding research is that it is really only applicable in theory until you actually get out there and start something. It’s easy to make things work in your mind’s eye. It’s relatively simple to understand how nuclear power is generated when you read a well-written article about it, but that doesn’t mean you’re ready to go out and run a nuclear reactor! When I was planning ahead I spent hours and hours trawling the internet to look into trends, how to market my new company, get information on my new competition and find out what it was they were doing to succeed. Some of the things I did to research my business included:

  • Building a relationship with suppliers: I made a concerted effort to get to know suppliers, and know them well. I spent time emailing them about the industry, went to their offices and met their teams.
  • Studying my competition (for too long): once I had worked out who the main players were, I invested a lot of my time finding out about them. I wanted to know who they were, and what their background was in the industry. That was fine, but I probably should have spent a lot more time working out how they got to where they were. Instead of just being inquisitive about their businesses, I would have been better off working out how they ranked so well and how they converted prospects to sales.

In the end I came to the conclusion that research was an essential element of getting started, but it was just that, an element in a much larger picture. Learn this lesson, and learn it well, before you sink too much time into your research: it’s easy to fall into the trap of focussing for too long on researching a business and not doing anything to get it started! Therefore, before you quit your day job and go plunging ahead into opening the business of your dreams, take some time not only to research, but to test your market for the products or services in which you are interested in providing. Test different demographics, try different markets, locations or niches, talk to people, get non-biased feedback, and more importantly listen to what they are telling you in this feedback, not just what you want to hear.

Family, Friends and Frustration

While there are plenty of family run businesses out there, this doesn’t necessarily mean you should set out with the intention of bringing friends or family into your operation. What might seem like a good idea at first, can quickly become a nightmare. When family ties are tight and those closest to you are supportive and willing to do what it takes to help make your dreams come true, it’s hard to deny that getting them involved in your business might seem like a great idea. As the excitement fades and issues begin to arise however, you may find it increasingly difficult to say no to these people; and saying no is often an integral part of running a successful operation. As they say, when trying to please everyone, you please no one. And what if you find that you must fire or layoff one or more of these people? Who do you choose, and how? Will they harbor a grudge about it afterward? Will it affect family dynamics, your friendship, your marriage or all of the above? My advice is if you need a partner then get a partner, but mixing business and family or friendship can end with disastrous results. I’m not going it alone on my current business project: it works because my skills are different to my business partner’s. From experience, it’s complimentary skills and personality that makes a partnership work. If you don’t have one or the other, then I’d stay well clear. Differing yet complimentary skills are often cited as the key to an effective partnership because when skills overlap too much, arguments can occur over differences in opinion. In my partnership, for example, I’m the one who’s more active in marketing and writing, while my partner is more analytical, ie. not really interested in writing. Personality clashes are also a cause of many collapsed business partnerships. Although I’ve had a couple of dodgy business partners in the distant past, I’ve been mostly fortunate enough to have a business partner who compliments my own slightly zany personality and social intricacies. You just need to be aware that starting a business is a stressful time for anyone, so even the seemingly least of relational problems can quickly mushroom into a a deal-breaker.

Know Your Partner(s)

You shouldn’t just jump into bed with someone whose history you don’t know, nor should you jump into a business with someone you don’t know. Getting to know the person or people with whom you’re considering a partnership can help to avoid issues down the road. While a prospective partner might tell a good tale or be brilliant at what they do, this doesn’t necessarily mean you will immediately take to one another or that he or she will even be beneficial for your business. Going into a partnership should be akin to conducting a job interview – done with measured caution and lots of questions, recognising strengths, weaknesses, and where this person can help or hurt you most. As I said above, I’ve had the occasional run-in with disaster courtesy of a poor choice of business partner. In fact, one of the worst business partners I’ve ever had the pleasure of ‘working’ with was a family relative whom I knew quite well. This was a classic case of a personality mis-match whereby my business partner thought he had the right to have the final say on every single matter pertaining to our embryonic business. It took only a few weeks of pressure before we found ourselves in a vitriolic argument hurling accusations at each other. Looking back on it, I am so thankful for that argument and a business opportunity missed. I really would like to labour my point that just because you think you know your prospective business partner, that doesn’t preclude you from a complete breakdown in communication when under pressure. Even if your preferred partner appears to know his or her stuff when it comes to your industry vertical, it doesn’t necessarily mean it will be a productive relationship. Do yourself a massive favour and recognise this fact earlier rather than later – it could save you time, trouble, and money. Worse still, you could lose a good friend for life.

Just Because It’s Good Today, Doesn’t Mean It’ll Be Good Tomorrow

Your business can be soaring with the eagles one day, only to be running with the turkeys the next – that’s just the way business works. When things are good, it might appear that they are going to stay that way forever, and you might be so busy that you feel there’s just no time for planning ahead. But looking forward in your business approach can help you to better prepare for the dips and curves that will inevitably lie ahead in your road to success. If however, you find that you’ve missed the bus and are starting to lag behind competitors, it might mean that you’re sailing a sinking ship. Knowing when to stop bailing, don your life jacket, and abandon ship before it’s too late can be key to sustaining the ability either to try again later or just move on with your life. You may love your business, but it might not love you back, and just like a relationship, you have to know when it’s time to do what’s right by you and just walk away. I’ve actually got some personal experience with this. Several years ago I was involved in a small store that wasn’t going well, at all. In fact, a living nightmare is the only way I can adequately describe this excuse of a business. Weeks blurred into a haze of endless problems and sleepless nights. Late shipments, constant customer care issues, problems with suppliers and devastating cash flow constraint – you name it, I’ve been there. It came to the point where it just was not worth it any more. I was done with the stress, the pressure and the terrible pay. So one day I ended it. I’m not one for quitting easily in the face of adversity, but I’ve got to say that it was a real weight lifted off my shoulders. If you find yourself in a similarly dire situation, do not be afraid to give up and move on! In my current business, we’ve been through some major ups and downs. Hacked blogs, broken servers, dodgy developers, unreliable payments: these have all cast their shadowon my business in the last year. Did I give up or lose focus when things went wrong? No. In fact, I’d say that you often work your best in the face of adversity. That hard work has paid off, but you just need to be sure that there’s a future for the company you’re working so hard to build.

Conclusion

No matter how easy running a successful business appears from the outside, it has likely taken a lot of hard work to get it to that point. Planning, preparation, and the ability to learn from others’ mistakes as well as your own can be key to making your business a success. While there’s no guarantees when it comes to making your dreams come true, going into a business venture aware of the risks and knowing the possible problems your likely to encounter can certainly increase the likelihood of achieving your goals.

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