6 Mistakes Entrepreneurs Make

1.      The founding group is formed spontaneously

When forming a partnership, make sure you and all involving parties are in the right state of mind. Forming a partnership under the influence of alcohol isn’t the smartest thing to do. But I will be surprise if a successful partnership was formed because of one intoxicating Friday night. Anything is possible right. Take the time to understand all involving parties’ interests, and goals. If everyone interests and goals are mutual, then there is a possible making of a successful partnership.

2.      Automatically using personal or family lawyers, insurance agents, CPAs, and bankers as advisers

Sometimes professionals who are family don’t have the professional interest and proven experience to help you build your business. But since their family, it’s very difficult to use services of someone else. And it may be in your best interest for the business sake to seek services of a professional. We all heard the cliché saying, “Business is business.”

Interview Insurance agents, CPA’s, bankers, and attorneys who are developing a relationship with companies. You can find these professionals by referrals. Interview them, discuss fees, and check their references, then decide if they have the answers you are looking for and if you want them involved in your business. You don’t need to know all the answers; you just need to know where to go to them.

3.      By nature entrepreneurs/ people tend to listen attentively to themselves

 

In forming a new enterprise the parties involve should bring a balanced, thoughtful view in a decision making process. It’s good brainstorming when everybody gets involved and shares their inputs. Listening attentively to yourself is easy, listening to others is a skill in itself that goes a long way.

 

4.      Giving stock or stock options before the company proving its long-term value

 

Cash is almost always tight in the early days of a new enterprise. Cash is also needed to turn the wheels of your business. Offering stock options in the early stages without stability is a bad idea; because you may end up with angry stockholders/owners and you may have to repurchase the stock when the company can least afford to buy back shares.

 

After the company is beyond the point of initial stability and all involved parties have given deep, detailed, and long-term thought the company can consider issuing stocks.

 

5.      The board of directors consists solely or primarily of insiders company officers, their spouses, and friends or relatives

 

The purpose of the board is to aid and replace the CEO of the enterprise while maximizing shareholders wealth. Helping the CEO optimize the financial performance of the company is unlikely to be achieved from insiders, spouses, friends, or relatives. A strong board that is seasoned can be your best source to managing and growing your business.

 

6.      People with different motives are on the same boat

 

Some people are seeking long-term capital gains. This usually takes stock to build net worth. Others are seeking a comfortable annual income. What ever the case may be, a smart entrepreneur illuminate the driving force in each individual and think hard if there is compatibility across the team.

 

Conclusion

 

A new company is like an egg shell. It needs a well developed internal system to withstand the pressures of entering and competing in the marketplace. The entrepreneur can achieve this by surrounding himself with dedicated people that qualify in the particular field of the company. Entrepreneurs face the task of gathering the right people. Avoid these mistakes and surround yourself by other successful people and learn from them.

 

Adapted from “Entrepreneuring: The 10 Commandments for Building a Growth Company” By Steven C. Brandt

 

 

 

Tags: board of directors, building a company, building a growth company, CEO, forming a partnership, free enterprise, mistakes entrepreneurs make, stock options, successful entrepreneurs, successful partnership