1. I Know What I’m Doing, I Don’t Need a Business Plan
Maybe, but it’s unlikely you have actually taken the time to run all of your scenarios through the numbers and come up with a viable plan without doing the work. In any event, you will need a plan for any financing you seek. That said, a business plan should be a living document, not a shelf decoration. As the situation changes, so should the plan.
2. I Can Get Loans to Start My Business
If you have deep experience in an industry, a solid business plan which details your ability to repay the loan, and can qualify for commercial financing, you MAY be able to get a loan for start-up if you can sell it to a bank.
3. I Can Get Grants to Start My Business
Improbable. See the section entitled “Small Business Grants”.
4. The SBA Will Loan Me Money
The SBA does NOT make loans. They guarantee loans which are made through banks, so you must still qualify for a commercial loan.
5. I’ll Get Rich Quick
Highly unlikely, but not impossible. If you have just what the market wants, price it right, create the perfect delivery system and figure out how to find customers, you may survive. Once you have survived you may make a profit. But first focus on surviving.
6. I Don’t Need an Accountant/Bookkeeper
Maybe not, but you do need an accurate set of books and good quality reports and analysis. Can you do that? Will you do that?
7. We’ve always done it that way.
Unless you have recent and compelling evidence that the way you are doing things is the only viable option, consider all suggestions. Otherwise you are just defending the status quo. Do you love the status quo?
8. The Founder is the best person to run the business.
The hardest thing I have to say to a business owner/founder is “You need to hire someone to run your business”. You should not consider this in anyway denigrating: most people can be successful at some point in the life cycle of the business. But very few are capable of successfully running everything from a start up to a mature company.
9. No one can do this except me.
This very common belief will cause logjams in the company, infuriate your employees (and possibly customers as well) and give you ulcers if you persist in doing everything yourself. It’s bad for you and bad for the business. Learn to delegate.
10. I Just Know a Market Exists For (fill in the blank).
Unless you’ve done the research you probably don’t know. Even if you have impeccable research which supports your contention that the world is waiting for this product or service, you can’t be sure that they will buy it from you. There are no guarantees.
11. Sales are Everything
Cash flow is more critical, especially in the early stages, than absolute sales. Ultimately, profit trumps all. If you believe that sales are the key you are likely to underprice in order to make the sale, which will eventually result in tanking the business.
12. Customers Always Choose the Lowest Price
Nonsense. If that were true there would be no luxury products and we’d all survive on dollar tacos. People commonly choose what they perceive to be the best value – that may or may not be the lowest price.
13. I Can Write off My Personal Expenses to the Business
You can – at least until the IRS or your state taxing agency catches up with you – run your car, your teenager’s school tuition, your restaurant dinners and your gym membership through the business. You can, but should you? If caught, the penalties will be draining and could put you out of business. You are also undervaluing the company for purposes of loans or sale. Be very careful about separating your personal and professional lives.
14. I Know my Employees
In thirty years of consulting one of the key things I’ve learned is how little owners understand about their employees and what motivates them. The owner may socialize with employees and be confident that s/he knows what is going on. Probably not. Over and over I have heard that the employees are loyal and would never leave when, in fact, they are already interviewing.
Don’t make assumptions. Talk to them.
15. I Don’t Need Contracts
You need contracts and you need them to protect both you and the other party. That big sale could easily go south if the client’s expectations aren’t met. To ensure that everyone understands the same thing, sign off on it.
The same situation exists with many of the companies you do business with. Whether it’s installing a bathroom or creating a marketing campaign, or hiring someone, everyone must understand what is agreed to.