Common mistakes can kill your small business, but most of them can be easily corrected or avoided.
Today’s bad example: Expecting a new business to support you
I read the interview with a new business owner in my town. When asked why she started the business, she said she lost her job, so she started the business to pay her bills. I cringed, just reading it. Her business was starting with a big disadvantage. It closed in just a few months.
A new business will have to attract and retain enough paying customers to cover its own startup costs, pay the overhead, replenish inventory or raw materials if it’s a product-based business, and probably also make a loan payment. Don’t saddle it with paying your living expenses at first, too. Your best bet is to give a new business at least a year, and possibly two, before you draw a salary out.
Some new businesses are exceptions, generating profits right from the first. Others draw a big enough loan or financing to pay the founders. Most businesses can’t stretch revenue that far, especially new businesses and especially rural businesses.
If you want to maximize the chances of success, either have enough money saved to live on for at least a year, or start and build your business while you are still drawing a paycheck.
Our Friend Tatsuya Nakagawa wrote a great article on How to build your business before quitting your day job at Life Hack.
Together, we are going to try to help each other out of these most common, deadly mistakes. You can use real world examples, real small businesses. Write it up, take a picture, or shoot a short video. Take care not to embarrass the offenders! Key point: include suggestions on how to do it right!
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.