# 1 Your Ego Writes Checks That Your Business Can’t Cash
Starting and owning a business produces a special high and invites you to believe crazy things your ego says. To keep the high going and feed the beast that is the ego, you start buying things you cannot afford.
A successful person might consider buying these things only after the business made a profit. And that same person only considers it. Because there’s the other choice of putting profits back into the business.
I hear what you’re saying. You need those things to impress and get customers. For street cred. To be professional. To compete with the Big Boys. As you drive around in a 10-year old Honda, meeting clients at Starbucks and getting no benefit from advertising [guerrilla advertising is more hard work on top of the hard work you’re already doing], yes, you may not be servicing the same clientele the Big Boys are now. But if you burn your cash, you’ll never be able to compete. Do you want to compete with the Big Boys while managing a house of cards? Or do you want to compete when you know you can win without risking the farm?
# 2 Your Ostrich Borrows Too Much Money
Not being able to pay the bills hurts. On so many levels. If you can’t pay the bills, the problem is not that you can’t get funding. The problem is that your expenses are more than your revenues. Borrowing money is easier than fixing the revenue/expense issue. It’s a band aid for something that’s hemorrhaging. Don't stick your head in the sand. Face the revenue and expense problem and tweak it.
We all know there is an appropriate time and place for leverage. But leveraging your business is a tightrope act and that means you have to know something about walking a tightrope. A profitable business will fail if its debt repayments use up the profit. I’ve seen it happen too many times. Don’t go the easy route. It rarely pays off.
# 3 Your Scaredy Cat Won’t Fire Bad Employees
Bad employees can bring a business to its knees, and fast. They waste materials and resources and make enemies of your customers. With today's social media, you can’t afford bad customer service. Are you letting bad employees hold your business hostage because you feel sorry for them, they are related to you or you just can’t deal with firing them? Do you keep counter-productive employees because you don’t want to do their work yourself until you find a replacement?
I find many business owners feel powerless and at the mercy of their employees. You own the business. You are the boss. It’s hard to remember this if you’ve worked for someone else for 20 years before you started your business. Good and excellent people are available to work in your business. But if you believe they don’t exist, you will never find them. You may need to pay a bit over market to find and keep good employees, but your money could not be better spent.
Another One Bites the Dust" by Queen from their 1980 album The Game
# 4 Your Miser Won’t Pay Decent Wages
Finding and keeping excellent employees will usually cost you more than what the market says to pay them. Remember the “market” price is usually the minimum or an average. If you want above-average people, you have to pay above-average wages or provide above-average working conditions. Don’t expect to have an excellent business while treating and paying your employees at minimum standards.
# 5 Your Racecar Driver Can't Put on the Brakes
Uncontrolled growth is a recipe for crash and burn. Sometimes you have to say “no” to speed if you cannot manage the growth. Slow and steady wins the race. Find your excitement in other areas of the business, not in gambling it away while going for the big score.
# 6 Your Free Spirit Won’t Stop To Look at the Numbers
There is no way you will make the best decisions for your business if you don’t look at the financial numbers. If it’s something you hate doing, hire a bookkeeper or business coach to make you sit down once or twice a month and study the numbers and percentages. Don’t be the business owner who has to close the doors next week and had no idea the end was at hand.
# 7 Your Grasshopper Has No Plan B
What is your Plan B for the hard times? Your plan B can be cash reserves or your ability to work for someone else to bring in extra income. For example, if you have a bookkeeping business, can you get temporary work with a CPA firm or find work through a temporary employment agency? Have a Plan B and don’t wait too long to use it.
# 8 Your Star-Crossed Lover Refuses to Pivot
You have a love-affair with your current product or service, and it’s hard to let it go. But if no one wants it or can afford it because of an economic downturn, you have to move on and innovate. Remember, you are an entrepreneur! "Pivot" is a term from the book, “The Lean Startup” by Eric Ries. In simple terms, “pivot” means to change what you're selling because what you’re trying to sell is not getting sold! I’ve seen builders and architects do this over the past few years. Their pivot was to combine their current knowledge with the new knowledge (and trend) of “green building,” then consult existing property owners (residential and commercial) in lowering energy use or incorporating green technology into remodels.
# 9 Your Child Mistakes Cash Flow For Cash Stick
If you are inexperienced in managing cash, you may not understand how much things cost. You see $250K in annual sales running through your bank account, and the inexperienced cash manager in you mistakes cash flow for cash stick (profit). After seven years, I'm still amazed at how much it costs to run a business. To an inexperienced spender, $100K seems bottomless. How could it ever run out? Always assume you have less money than you do.
# 10 Your Hippie Is Afraid to Put Emphasis on Making Money
The "bottom line" is not what matters all of the time, but if you want to stay in business, it does matter most of the time. Making money often gets a bad rap because of the way some people go about it. If you don't make money, you and your employees will be out of a job. And how is that helping anyone? Revenue is important, profit is important, and how you earn both is important. Use your business to change the world, but make a profit so you can keep changing it!