Just like anyone else, entrepreneurs make mistakes. Many startups have rich, error-filled histories rife with stories about how their founders nearly ruined everything. WeWork’s failed IPO and potential SoftBank acquisition provide a stark reminder that no amount of success immunizes one against failure.
Just because mistakes are common doesn’t make them unavoidable. You don’t have to make the same blunders as everyone else when others’ experiences provide a blueprint for avoiding calamity in the first place.
Watch for these entrepreneurial mistakes, and take proactive measures to avoid the headaches.
1. Neglecting intellectual property law
No matter how clever your new product name may be, you can’t continue if someone else has already registered it. Do the legwork to make sure no one else owns the names and features of your company and products before moving forward. Neglect to do so, and you’ll inevitably end up in court against someone with a solid case looking to take a cut of your earnings.
Go through the proper channels to protect your investments and ideas. Consult with an intellectual property lawyer to learn more about your options. You may be surprised by what you can protect. If Campbell’s can lock down the word “chunky,” who knows?
2. Leasing or purchasing the wrong office space
Just as all modern companies must be technology companies to some degree, nearly all businesses must also dabble in real estate. Choices on where to locate your office, how much space you actually need, and whether to lease or purchase could have a major impact on your bottom line. Get it wrong, and you could wind up with expensive rent payments and few options for escape.
Although most people prefer to own, commercial real estate company CARR advises business leaders to consider long-term office leases. Not only do long-term leases lock in that monthly payment, but they’re typically sweetened with substantial tenant improvement allowances, free rent packages, and additional concessions. There’s no one-size-fits-all approach, but leasing typically offers more flexibility at lower costs for younger companies. Best-case scenarios — growing quickly! — can result in worst-case scenarios if you permanently don’t have enough space for all your staff.
3. Mixing up personal and business funds
Early in October, basketball personality and Big Baller Brand co-founder LaVar Ball was sued by his former business partner, who accused Ball of embezzling more than $2.5 million from the company. That situation has yet to play out in court, but it brings up a good reminder: Plenty of founders have used their own savings to start successful businesses, but blending business and personal accounts can lead to tricky situations.
Even entrepreneurs with no ill intentions can make life harder on themselves by mixing business and personal funds. Keep all business and personal accounts separate, and use different credit cards for personal and company spending. Not only will this give you a clearer picture of your finances, but it can also protect your personal accounts from being plundered if something were to happen to your business.
4. Assuming everyone shares your vision
You might have the best team in the world, but your team members can’t help you if they don’t know your goals. Website bug-tracking startup BugHerd went through the highest highs and lowest lows before finally finding the right path. Had BugHerd’s founder made it clear from the get-go that fast scaling was its priority, it could’ve avoided some headaches.
Rather than wait until you have to lay off staff or pay back investors, use a vision document to get everyone on the same page. If your team includes fewer than 10 people, ask teammates to draft a sentence or two describing what they want the company to achieve. Talk through disconnects between your vision and the ones others present. If your team is larger, use opportunities like all-staff meetings to regularly remind employees of that vision.
5. Working on tasks you could delegate
As the business owner, your time is in higher demand than your team members’. Don’t let that go to your head, but delegate tasks that someone else could perform. Look beyond titles; challenge workers to help out however they can.
Realizing that executives are expensive and anyone can create blog content, delivery startup Favor hired dozens of people for its team before bringing aboard a CMO. Delegate freely, and bring in additional support if your existing team is struggling. Don’t inflate your labor expenses beyond what you need by over-hiring.
Even if you manage to avoid these five mistakes, you’ll undoubtedly fall prey to others. Everyone makes bad decisions; how you respond to them will dictate whether your business succeeds over the long haul. Whether it flies or fails, speak up — pay back the favor for those who come after you.
Source: Forbes – Entrepreneurs