I have to admit it. I am a Mark Cuban fan. Whatever you may think about him personally he has successfully demonstrated over the years that he can make just about any new business venture successful. From the billion dollar sale many years ago of his company broadcast.com to taking the Dallas Mavericks to an NBA title. In addition, he gets a piece of the action for every single new entrepreneur that presents (that's right not even ones that he buys a piece of for himself) on the popular television show Shark Tank. He has an abrasive personality and makes no apologies for getting the very best out of himself and those that are part of his successful organizations. Generally, I see three big mistakes new entrepreneurs make when they begin a new business venture. Mark Cuban will beat you in an arm wrestling match because he knows how to avoid these mistakes and make just about anything he does in a business a money making success. Here are three tips you can learn to get your business off to a good start.
MISTAKE 1 - POOR DECISION ON HOW TO CAPITALIZE THE COMPANY- Unfortunately, most new business owners cannot see past their belly button. What I mean by this is that their major focus of concentration is how much immediate capital they need when they start their business. For example, they have $10,000 set aside in the bank and they have done some initial analysis that tells them this money will cover the website, business cards, and initial expenses to get the business running off the ground. The problem is that most entrepreneurs can understand the downside risk of losing all of their money, but have very little vision about what happens if their product or service takes off? Will you need 2 more staff people? Will you need real estate space? Will you have more technology needs? Since businesses can generally only be capitalized out of cash flow, debt structure, or equity structure, you should spend time in the early stages of the business thinking about how you capitalize when you become successful or this can throw a major dent in your growth plans.
MISTAKE 2 - NO CONCRETE MARKETING PLAN- Most new entrepreneurs will bring some specialized experience or skill into the venture they are creating. While you may have a tremendous product or service to sell, lead generation and client acquisition should be your number one concern to quickly escalate top line revenue. I'm amazed at how many new entrepreneurs have spent very little time developing an overall 360 degree marketing plan. It is important to understand that marketing/client acquisition is the most highly paid position for anybody in the United States in any business or corporation and must be a top priority for you in your entrepreneurial venture. How will you gain new customers? What will your lead cost be? What will your client acquisition cost be? How will you expand your brand name so it is recognizable? These are important questions to be answered as you build your beta testing so you can figure out quickly how to get at your target market.
MISTAKE 3 - POOR STAFFING CHOICES- So you really think that you and your wife would be good business partners? Or, how great would it be if your two sisters and you got together to have a family business? So many new entrepreneurs hire their staff out of necessity to get a job filled quickly or hire a family member because they 'know' they can trust them. Often, poor staffing choices are made because the new entrepreneur doesn't spend time creating and organizational chart and clear role descriptions. You need to spend time determining the jobs that you need to do in the company as the owner (stop being a control freak!), and clearly ascertain what skill needs you have to fill as you scale revenue within your business venture. Do you need someone with excellent organizational and administrative skills? Do you need someone with specific technical expertise? Do you need a sales person? Or is this something you can outsource without hiring a full time position? The key here is not to make quick staffing decisions just because the papers on your desk have piled up high and you can't get back to returning all of the voice mails you got that day.
Mark Cuban knows how to take risk and grow a successful entrepreneurial venture. He understands that by having these three areas lined up, it allows him to play the leadership role necessary to get all people in the company rowing the boat quickly in the right direction. My guess is he'd beat most of us in an arm wrestling match anyway (he's not a small guy), but avoid these three big entrepreneurial mistakes and you to can get in the tank with the sharks!
Visit www.oXYGenFinancial.net to request a consultation on how to make smart money moves for your future.
Written by:
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice and Services
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