Ten Things To Do Wrong If You Are Self Employed by:Joe Landis
So being your own boss excites you?
Over the years, many people have tried the self employment route and have succeeded. But on the other hand, many have not. Much of your success will depend on doing the right things, working through the things that go wrong, managing your finances correctly, and keeping a positive attitude. But the wrong mix of any of those items can prove disastrous. Here are some of the things that can take your business into the ground.
1. Be over enthusiastic
Enthusiasm can be a very good thing when you start your own business, or buy an existing company. But if you are an emotional person like me, you'll find that sometimes the excitement of the moment will overshadow something you should be watching very carefully. Are you selling something for a price just because it seems like you are making money? Are you gung-ho about selling so much that you forget to take in account your overhead and unseen expenses?
2. Sell the wrong product
As with anything else, you can pick the wrong product to sell. Are you picking a product that has a very strong trend curve? Are you picking a product or service that may be short lived? Being at the right place at the right time is a good marketing strategy, but when the time comes to get out or change, do it. Do your homework.
3. Gamble your life savings on your venture
It takes money to run a profitable business. Sometimes the business needs extensive capital to get off the ground, but beware that you don't just pour money into the business expecting things to turn around without doing your marketing research. You can finance the business until you run out of money.
4. Underfund your business
There have been stories of people who bought one or two of something, sold them, and went on to turn their product over and over until they have capitalized themselves on a low dollar start-up. If you want to be known as a super store for a certain market and have no knowledge of the product or market, it may be a good idea to start small and grow with bigger things in mind.
5. Care only about sales and not service
You will never be successful if you only think about yourself. If you were raised to be very organized or you have tendencies to draw invisible lines "in the sand", make yourself aware of it. If you sell lawn mowers and you offer repair service, your customer will want to walk in the shop to talk to you or see what's going on. If you put up a "keep out" sign on every door of the shop, you'll be successful. I wouldn't be back either, unless you're the only repair shop in town.
6. Pick the wrong location
You've heard that location - location - location is the key to a store's success. But how about the store or company who has a shop in the back of another store, or down some untraveled road? Usually those people have a business outside of that facility, such as offering in-home service for their product. If you pick one of those types of places because the rent is cheap, your expenses will be low, along with your sales. Sometimes 100 feet farther back from the main road can make a difference between being right up on the road or not.
7. Borrow too much money
This sounds too simple, but it can be overlooked. A bank or lending institution may tell you that your credit is good for $X,000 and they can give you a line of credit for that much. If you only need half that amount, then only take half that amount unless you are a very good manager of your money. The thought of and the temptation of having a lot of extra money at your disposal can give you an opportunity to spend it for something totally out of your business goals.
8. Let someone else run the business
If you are the proprietor of a business, then you need to be there. If the business is called "Bob's Mower Shop", then the customer will want to at least see Bob there at the shop. Think of a time when you went to a business and purchased something of inferior quality, and you took it back. The clerk was not helpful so you wanted to talk to the manager. It only takes 1 person to tell 20 people about a bad experience. Unfortunately a person may only tell one other person about a good experience.
9. Hire the wrong people
Hiring the right people for your company or business is just as crutial as buying the right truck to haul your goods to the next town or state. Those people are your front line of interaction, your customer service, and trusted person all wrapped in one. Even if you have a large staff and you don't think the person on the loading dock is much to worry about, think again. They can complain or be offensive to your customers, and the customer may not be back for a while.
10. Assume the company is making more money than it really is
You have probably seen companies start and then fold in a year or two. It's real easy to buy a truck load of goods, then take a cash withdrawal for yourself believing that there is enough money to cover bills. For the first few years keep your personal spending to a minimum and build up the assets in your company/business so that in slow or down times it can hold its own.
About the author
The author is a laid off IT Network Engineer who is actively looking for full time employment. In the interim taking on short term projects.