Business mistakes - what are/were yours

Business mistakes - what are/were yours

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Discussion

threesixty

2,068 posts

202 months

Friday 12th February 2010
quotequote all
Failure to understand the market and most of our web related descisions.

Our public buying site was a failure because we simply assumed that what works in the US would work here.

The web has been an almost constant source of pain for us, I think at least 3 or 4 companys we've used in this area have gone bust, all the others promised the world and delivered horse st. Its a minefield


Number 5

2,748 posts

194 months

Saturday 13th February 2010
quotequote all
fesuvious said:
It took me a long time before I forced myself to sit down in peace and quiet for two days and work out exactly what my businesses cost to run. And I do mean thoroughly and exactly, right down to the hour.

And then calculating properly, what profit I wanted to make.

That was the biggest mistake, not doing this excercise much much earlier. So many in my trade just 'compete' on pricing with no real thought of what it takes to be successful.

Then, the realisation set in that we should increase our prices by @20% !!!

That was the most nerve racking decision I have had. However, once resolved to the thought;

'fk it, make money or theres no point, may as well not bother'

It was easy, never looked back
Brilliant advice, this is something we did a couple of years back, finding the true cost of your business is essential there is not point turning over a million quid if your outgoings are a million and one quid! We take into account everything, do daily sales figures for turn over and profit, all this information is recorded and profit is caluclated after every cost has been catered for, it may sound obvious and basic but you would suprised at how many just base their success on just how much money they have taken but ignored how much how much they have to pay out!

Do it!

pb1695

390 posts

175 months

Saturday 13th February 2010
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As well as working for a profit instead of volume, the most important thing is to plan for failure. I don't mean planning to fail by this but plan what you would do if everything goes completely tits up.

Financial planning is also vital. Manage your cash well, also plan to have enough reserves to keep on running for at least 6 months without income (easier said than done sometimes), but at least this way if things get bad you have time to adjust and adapt, plus more importantly you will not let existing customers down - vital if you want to retain credibility.

Have fun, if it is no fun then it is not worth doing.

Remember you make your own luck, follow your instincts and when taking advice from professionals, think about whether or not it will make them more money or you! my experience is that advisers, particularly financial, are of little or no use.

Broccers

3,236 posts

252 months

Saturday 13th February 2010
quotequote all
Mine was not doing was not branching out on my own a lot sooner. Saying that learning from other's mistakes was invaluable.

Edited by Broccers on Saturday 13th February 20:07

singlecoil

33,313 posts

245 months

Saturday 13th February 2010
quotequote all
pb1695 said:
Remember you make your own luck
Actually no, luck, good fortune, call it what you will cannot be 'made'. Other things can be made, but luck is something that happens, that's why it's called luck. Sometimes it's good, sometimes it's bad, sometimes it's neither.



amir_j

3,579 posts

200 months

Saturday 13th February 2010
quotequote all
singlecoil said:
pb1695 said:
Remember you make your own luck
Actually no, luck, good fortune, call it what you will cannot be 'made'. Other things can be made, but luck is something that happens, that's why it's called luck. Sometimes it's good, sometimes it's bad, sometimes it's neither.
Spanish saying: "luck is in love with hard work"

essayer

9,011 posts

193 months

Saturday 13th February 2010
quotequote all
Hoo boy.

1. Not setting out, from day one, how much each director would be paid, what they could do with company money, and how debts will be repaid.

So we had personal use of company credit cards. "But I'm owed £xx because of .." very quickly you end up in a total mess not knowing who owes what.

Or determining the repayment schedule of shareholder's loans, or what they get for risking their money in the first place. "I put in £10k, so I get 30% of the shares" as soon as £10k profits appear "I want my £10k back straightaway.." .. "but I'm still owed 30% of dividends and I want a salary too.."

2. Not keeping up with the competition

If you have a new innovative idea, and it gets well known, you have about 2 years before people with more money than you start pumping in big money and taking all your business from you. Unless you can compete, it's time to sell on, specialise, etc.

3. Don't do business with family

That way, if you fall out with a business partner it doesn't end up with family members ringing you to mediate / argue / shout.

4. Get acquainted with the figures and study them every day

If you're not making money, don't end up £50k into a personally guaranteed overdraft before you realise it!

5. Not listening to a lawyer when we were selling the business

When selling a business get a good lawyer. In fact, get the best you can. Don't ignore their advice, or try and save some small amount using a crap, cheap lawyer or even worse, trying to do everything yourself: when the smoke clears and you suddenly discover you don't have a business, an income or any payout, you'll rue not listening to the lawyers. We ended up with 100% of nothing when we could have had 90% of a lot more!

Related, when you do sell it, the buyers are not your mates and you do not do them any favours until the deal is signed and the upfront money paid. You don't extend them any credit, don't borrow money from them, don't transfer staff, knowledge, property, etc etc until you're holding cash.


HHone

65 posts

171 months

Sunday 14th February 2010
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I'd say my biggest issue when I first started out was 'Cash Flow'.

It was difficult pitching for jobs that would take a few weeks or months to agree and finalize before getting paid.

From set up till that first 'big project' I spent 6 months doing really bad small paid jobs just to keep me going in the run up
to that big project. Moment it took off other big projects followed and the small stuff that my business wasn't even specializing
in soon disappeared.

I guess also because I work in property, unless you've complete a property design and build wise you don't have any images for
marketing/website material...so 6 months to win the first project and another 4 until it was complete and images were taken and
used.

Tough 10 months, nearly a full year of pitching for about 6 projects, 1 eventually snapped in the end and interestingly another 3
soon followed.

I always found trusting people hard, the circle I worked in all knew each other. There were 4 companies that all knew one another
and we all seemed to envy each others success or longed for failure of the others...it was very naive of us all but we soon matured
and realized we all had assets that would compliment each company so Joint ventured on projects.

Pobolycwm

322 posts

179 months

Sunday 14th February 2010
quotequote all
singlecoil said:
pb1695 said:
Remember you make your own luck
Actually no, luck, good fortune, call it what you will cannot be 'made'. Other things can be made, but luck is something that happens, that's why it's called luck. Sometimes it's good, sometimes it's bad, sometimes it's neither.
Luck is when opportunity meets preparation

seaninog

513 posts

188 months

Sunday 14th February 2010
quotequote all
cazzer said:
Not having a shareholders agreement and believing my business partner was an honourable man.

We had a split of shares 45% (him), 35% (me), 15% (key employee).
Everything was running along fine. Making around £200k a year profit.

Then he sold his house. Made £2M profit from it.
He was 55 with £2M in the bank and just decided he didn't want to do it anymore.
Fair enough.

He sold his shares to A.N.Other company for £25k. £25K!!!!!!!
A.N.Other company gave me a choice of selling my shares to them pro-rata and they would take all the Employee's on. Or dont and they wouldn't.

Meh...it's a lot more complex than that, but ultimately, no shareholders agreement not good.
200k profit and 45% sold for £25k?? Bloody hell!! That's just the kind of deal I;'m looking for...

BTW this is an **EXCELLENT** thread. Thanks to the OP for starting it and I hope it runs and runs. Lots of learning here.

Oh, and my two cents worth was being too conservative and not believing in myself enough. A lot of idiots run businesses out there and oftentimes) get away with it. For some reason I doubted I was good enough even though I acknowledged this fact. #FAIL!

Frimley111R

15,537 posts

233 months

Monday 15th February 2010
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essayer said:
When selling a business get a good lawyer. In fact, get the best you can. Don't ignore their advice, or try and save some small amount using a crap, cheap lawyer or even worse, trying to do everything yourself: when the smoke clears and you suddenly discover you don't have a business, an income or any payout, you'll rue not listening to the lawyers. We ended up with 100% of nothing when we could have had 90% of a lot more!

Related, when you do sell it, the buyers are not your mates and you do not do them any favours until the deal is signed and the upfront money paid. You don't extend them any credit, don't borrow money from them, don't transfer staff, knowledge, property, etc etc until you're holding cash.
Absolutely! The company I work for sells more SME levels than any other (bcmscorporate.com) and lawyers who have no experience in selling compaines have frequently caused entire deals to collapse. They don't need to be the most expensive but they do need to be experienced.

Man-At-Arms

5,906 posts

178 months

Monday 15th February 2010
quotequote all
cazzer said:
a split of shares 45% (him), 35% (me), 15% (key employee).

He sold his shares to A.N.Other company for £25k.
so the value of your company was around £55k !

JCB123

2,265 posts

195 months

Monday 15th February 2010
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Not keeping an idea quiet - I made a stuffed crust pizza years ago at school before Pizza Hut launched theirs......I'm sure they stole the idea from me - I could've been rich - rich I tell ya!

On a serious note - this thread is great, I'm new ish to business so I'm learning a lot...

Frimley111R

15,537 posts

233 months

Monday 15th February 2010
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On 'Working Lunch' a successful entrepreneur said ‘If you make a mistake with a new member of staff rectify it quickly’. I’ve worked in too many companies who have made this mistake and the people are still there, being a PITA every day, for years, because the company didn’t get rid of them as soon as they realised that they had made a mistake. Its one of those things I never forgot because I see the results of not dealing with this every day!

birdcage

2,838 posts

204 months

Monday 15th February 2010
quotequote all
I could have had an extra 2% of a company I was offered a partnership in by sticking to my guns, we sold it...10% tax and a 'loss' of a very small house or a very big car depending on your preference.

groomi

9,317 posts

242 months

Monday 15th February 2010
quotequote all
thegavster said:
Can I just add: BACK EVERYTHING UP!!!!
And keep every single email - filed away in a logical place. When an issue arises, you need to nip it in the bud quickly!

mathewb

301 posts

174 months

Wednesday 17th February 2010
quotequote all
1. Taking on clients and ignoring an instinct that they aren't good ones. I've learnt now to trust this radar

2. If people are biting your hand off at your current rate you are not charging enough.

3. Outsourcing. If you want a job done properly, do it yourself. In theory I could double my turnover by outsourcing some of the less creative aspects of my job but the work delivered rarely meets my standards. I now realise it's best to make a more modest turnover, enjoy my job more and have complete control than it is to attempt to increase turnover and stress along with it.

4. Setting myself the wrong goals. This follows on from the point above - when I started working for myself the goal was to make as much money as quickly as possible. I realise now that my goal all along should have been to enjoy what I'm doing.

5. Wasting time on quotations. I used to write individual responses to quote requests but this quickly sapped time since most people tend to fire off the same message to lots of different firms. Now I have a bank of set responses that cover about 75% of the enquiries and the rest I'll follow up on the phone.

6. Giving my home number out for client to call while mobile was on the blink. Never ever do this. Client will ring you at all hours of the day or night whether you're on the toilet, on your missus, sound asleep, having dinner, watching TV... they will call at any/every inopportune moment. Also, your partner will hate you. The worst was a call at 11:45pm querying if I'd received an email sent two hours prior. I politely asked him to use my usual number only, from then on. The next time he rang was at 10pm - my business line diverts to voicemail since it's outside working hours - so he rang the house. Again. My wife answered, having just sat down to rest after a 12-hour shift at work, and told him to "call back at a decent f***ing hour, don't you have any respect?" Amazingly, he's still on board, but rings at a reasonable hour

7. Never work for/with friends or family.

Frimley111R

15,537 posts

233 months

Wednesday 17th February 2010
quotequote all
mathewb said:
7. Never work for/with friends or family.
I agree to some extent although a lot of family businesses do well (I work for one currently). I do know what you mean though. I am tempted to set up my business with a long term friend but I know he won't have quite the passion I will, even though he will work hard. Shame really as I'd like to.

therealpigdog

2,592 posts

196 months

Wednesday 17th February 2010
quotequote all
thegavster said:
Frimley111R said:
mathewb said:
7. Never work for/with friends or family.
I agree to some extent although a lot of family businesses do well (I work for one currently). I do know what you mean though. I am tempted to set up my business with a long term friend but I know he won't have quite the passion I will, even though he will work hard. Shame really as I'd like to.
There's lots of ins and outs to it, however if you both have the capacity to deal with things in a professional manner then you'll be fine.

Equally, doing work for friends is fine as long as you stick to it being supplier/client rather than matey/matey as that's where it goes tits up.
+1

as far as business is concerned treat your family and friends as suppliers, customers or employees and be wary of treating your suppliers, customers and employees as friends.

AdeTuono

7,240 posts

226 months

Wednesday 17th February 2010
quotequote all
Pobolycwm said:
singlecoil said:
pb1695 said:
Remember you make your own luck
Actually no, luck, good fortune, call it what you will cannot be 'made'. Other things can be made, but luck is something that happens, that's why it's called luck. Sometimes it's good, sometimes it's bad, sometimes it's neither.
Luck is when opportunity meets preparation
Or, as Samuel Goldwyn said, 'The harder I work, the luckier I get'.