The Ten Cardinal Sins: Entrepreneurial Errors You Must Never, Never Commit
I've never known an entrepreneur who started a business without making a few mistakes. Certainly, you'll be no exception. You'll make them, try to fix them, and then move on. However, some entrepreneurs fall into traps that are bigger than mistakes. They are, in effect, entrepreneurial sins. Some of these sins will harm your personal life; others may irreparably damage your business, and still others will do both. Many entrepreneurs who came before you have committed these acts and, predictably, suffered their consequences. In the interest of saving your entrepreneurial soul, here are the ten cardinal sins that you must never commit:
1. Not learning from your own mistakes. Talk to any entrepreneur and he or she will tell you about crazy, ridiculous mistakes that will have you shaking your head and saying, "I just can't believe someone could be that stupid." Well, they can, I can, and so can you. I don't think it's stupidity at all, by the way. Entrepreneurs have so many irons in the fire that it's all too easy to get distracted, to let things fall through the cracks, to overlook what might seem obvious to an outsider.
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No matter how brilliant a mind you have, no matter how sharply honed a business sense, you don't have a crystal ball. And that's okay. No one ever learned anything meaningful from success, but failure–well, failure is chock-full of lessons on business and life. Accept that you will make mistakes–just make sure that you learn from them, and work hard to never commit the same mistake twice.
2. Trashing your personal life. Balancing "work" and "home" can be a challenge for anyone, but for entrepreneurs, it seems to be especially daunting. It's not hard to understand why. Entrepreneurs tend to work longer hours than paycheck earners. Because they are so passionate about what they do, they are always thinking about the business, the problem du jour, the next venture waiting in the wings. The entrepreneurial mind is hard to turn off. It's hard to take a vacation. It's hard to put aside your worries about making payroll so you can help your son with his algebra homework, or connect emotionally with your spouse, or spend meaningful time with your friends.
Too often, the result is a strained parent/child connection, or a bitter divorce, or a roster of business relationships and casual acquaintances in place of real friendships. Please don't let this happen to you. Work can and should be a richly fulfilling thing, but it is no substitute for meaningful relationships with people you love. No one wants to neglect the people that matter, but unless you are constantly vigilant, it does happen. You have to find a balance.
3. Expecting customers to come to you. It's opening day. Your new business is up and running, your OPEN sign is in the window, and you are ready to serve your new customers. Only no one is lining up at the door and the phone isn't ringing. Know why? Because you didn't do any marketing to get the word out about your business. Unless you get tons of foot traffic in the area where you are opening the business—and even if you do—you will need to get the word out about your product. You don't have to buy a lot of expensive advertising. When I opened a Nutri-System in Altoona, PA, I was having trouble getting any foot traffic because it was such a small area. My primary target was 22,000 people, but no one was responding to the print ads I placed in the local newspaper because no one was reading the local newspaper (except for the sports section!). To drive business, I decided to give local deejays free memberships in order to get them excited about the program and in turn they gave me free plugs on the air. There are lots of ways to get the word out. It doesn't really matter how you do it, just that you do it. A bit of well-planned-out marketing will help you turn that empty store into a bustling, customer-filled business.
4. Losing your soul. Financial success can do awful things to people when they aren't spiritually and emotionally equipped to handle it. Too much money too fast can make you suspicious, callous, greedy, and prideful. Think of the Seven Deadly Sins and you'll get the picture. It's not a pretty one. Success can change people, and not necessarily for the good. When you become successful, people will start to treat you like you know something. If you start giving in to that attention, you are in big trouble. I am not here to preach to you a sermon, but I truly believe that no amount of money makes up for losing sight of the things that really matter in life–friends, family, humility, compassion, faith, and love. Strive always to be the kind of person who, if you lost every cent you had, could still find happiness.
5. Maxing out credit cards. It's never a good idea in any situation. Maxing out your credit cards while trying to get a business off the ground could be disastrous. You'll find that charging item after item for your new business will be the most expensive money you've ever spent. I think credit cards are the most accessible and easy way for small businesses to get in trouble. (After all, they are much easier to get than start up loans!) There will be times when you will want to use a credit card rather than take cash out of the business, and that's okay. Credit isn't inherently bad. Just make sure you have enough money to keep making payments on your cards.
It is vital that you have good credit in case you need to make a big purchase or decide to open a new business down the road. You don't want to run up tons of credit card debt that you will have to pay off if the company doesn't survive. Or if the company is successful, you don't want to be paying off creditors instead of putting your first profits back into the business. Wracking up massive credit card debt will only cause you more worries and pains, and when you are developing a business you already have plenty of both. You don't need more!
6. Keeping your idea a secret. At first glance, this may not seem like a sin. In fact, it may seem like a good business decision. Many entrepreneurs don't want to reveal their new idea for fear that someone else in the market will beat you to the punch. But take a little advice from an entrepreneur turned investor. When I am looking at a potential investing opportunity and the entrepreneur I am working with is holding his cards to his vest, I know he is hiding something, and I immediately don't want to work with him. Lack of investors won't be your only problem. Launch a business banking on a product or service that, it turns out, no one wants and you will see why too much secrecy is a sin. In the early phases there is no need to reveal all the details of your product or service, but you must put some feelers out there to determine whether it's likely to succeed or flop. Do a lot of research in the market before you launch. Revealing a little bit of your secret and finding out who your customers will be provides peace of mind.
7. Thinking you don't need written contracts. There is so much excitement at the start of a new business that entrepreneurs are often afraid to get certain things down on paper. Allow me to make this as clear as I possibly can: When you are starting a new business, you need contracts for everything! Verbal agreements just won't cut it, especially when it comes to partnerships. You can't predict the future, and when money is involved you never know what will happen within a relationship. To ensure that you avoid unnecessary costly (and gut-wrenching) legal battles, always write out a contract when making business deals. It's the only smart way to do business.
8. Starting a business without the passion factor. Here are a few questions to ask yourself before embarking on an entrepreneurial venture. Am I truly interested in this field? Do I daydream about doing the work (instead of just spending the money)? Does this product, service, or activity feel meaningful? Does it benefit humanity? What I'm getting at is passion. If you don't have it, you are far less likely to be successful. Being an entrepreneur is hard work, so you'd better want to jump out of bed bright-eyed and bushy-tailed every morning, anxious to get to it. If you answer "no" to any of the questions above, your likelihood of success is greatly reduced. Chances are you will get the company going, and after your initial excitement wears off you will stop caring about the company, which will cause you to make mistakes. Carefully consider every angle of the venture before you get going. If you find that you lack a passion for it, stop before you get started and figure out the best business for you to pursue.
9. Choosing a bad location. We've all heard the mantra "location, location, location." If you are starting a company—especially a consumer oriented one—location may be vital to its success. Carefully consider how important foot traffic will be to your business. If you will be relying on passersby to bring business to the store, you will want to make sure it is very visible. Just like you should research the market in the area you are looking to open your business, you should also research the actual location. Choosing a bad location could make it difficult to create a successful business.
10. Trying to go it alone. While I've never been one for traditional business partnerships, I think it is absolutely necessary that you have a business "partner" when starting a business. Allow me to explain: You won't be able to make the business successful all by yourself. When you start your new business, think about your strengths and weaknesses. And then find someone willing to help you who complements those strengths and weaknesses. You may choose to make that person your business partner or you may just hire him on as your employee. Either way, use him to help you cover all of the bases. There are simply too many details to deal with to be a lone wolf. Relying solely on yourself is simply too much pressure. I think you'll find that nurturing great relationships is a much better way to do business than to try to go it alone.
Of course, committing one or two of these sins may not kill your business, but it will certainly make things more difficult. Remember this list as you start to develop your business and pay careful attention to each sin. You, your family, friends, and business partners will be much happier if you avoid committing these sins. It will mean the difference between being a happy businessman (or woman) or being one who is wracked with worry and unnecessary pressures caused by bad decisions.
About the author: Ty Freyvogel is also the founder of EntrepreneursLab.com and author of It's Not Your Smarts, It's Your Schmooze and Seize the Century!, as well as an advice guru at EntrepreneursLab.com. Ty is a dynamic public speaker, who is renowned for his lively and informative speeches that never fail to leave audiences inspired, as well as entertained. He can be reached at Ty@MakingSenseofYourBusiness.com