5 mistakes I made as a startup entrepreneur !

Hi there! In this video, I'm going to be taking you through the five things I wish I'd known when I started out in business, also known as the Five Mistakes I made as a startup entrepreneur that I'm desperate for you guys to avoid. And before we get to the details, if you've not come across me before, I'd like you to do me a favor and subscribe to my channel. I post new content every week and I would love to be able to share it with you. 

Right, before we get into this, let me introduce myself. If you've not met me before. My name's Paul and I'm an accountant, I'm a CFO, I'm an entrepreneur, and I've got over 25 years experience in helping businesses to grow profitably. And not only that, I've also run three businesses of my own. So believe me when I say I know what it's like to be an entrepreneur and how challenging that can be. And I'm going to draw on some of that experience in this week’s video. 

So, five mistakes I wish I’d avoided… Here we go.  Number one. The first first thing you should know is that working harder is often not the answer. Now, what I'm not saying here is don't work hard, because we all know that, running our own businesses, you have to go, it goes with the territory. But what I mean is work smarter rather than harder. Focus on the things that make a difference. 

Let me give you an example. The first business I ran, which was quite a few years ago, was a retail business down on the south coast of the UK in a town called Brighton, in an area called the Lanes, which is a really nice tourist area in Brighton. It's full of narrow, cobbled streets, beautiful shops, and it's always busy so it's a really, really charming place. If you ever get the chance to go, it's well worth a visit.  Anyway, I opened a shop there, which was selling home accessories: China, Glass, Barware, all of that good stuff. And because I'm a planner, before I opened the business, I did a ton of research.

I researched the products, the price points, and the location. I ran some focus groups. I did so much work before we opened the store but we opened it and it was a flop! Well, it was a flop initially. But why? Because actually, despite all my research, whilst the location was very busy with my kind of target demographic, the one thing that I'd failed to realize is that those people were all visitors to this, to the city. They weren't looking to buy stuff for the home. They didn’t want to drag bags of stuff around with them all day. They were down for a day out. And it’s very difficult to grow a business like that. But I did what I always do or had done up to that point, which was I worked harder and harder, longer and longer hours, spending less time with my family, trying everything I could to try and make a go of it.

I was hell bent on winning but I was working so hard that I couldn't see the wood for the trees. It took many, many months for me to finally realize this and take a step back. The reality was that location was never going to work for us. So we took the bold decision to close the store and move the business online and it was only then that things turned around for me.

Okay. So let's move on to number two. So the second thing I wish I'd known is that you have to take your medicine early. Now, this is a phrase that comes from Mary Poppins. We've probably heard it from our parents. And I hadn't realized it growing up, but actually that approach to taking medicine early is equally applicable, if not more applicable in business. So what do I mean by that? What I mean actually putting off making difficult decisions is never a good idea. Why? Because if something's not working, the longer you leave it, the more problems that's going to cause.

And actually they can grow over time. Whether that's like I just said, with my store being in a bad location, if I’d have closed it earlier, we absolutely would have lost less money, I can tell you that. But it also applies to everything else in business. And it also applies really strongly to people.

Actually, once you start to employ a team of people to help you, getting the right people in terms of personality and cultural fit is the most important thing. Yes, you need people with the right skills, but of course, skills can be taught but if you've got a person who's not the right fit personality-wise, even one person actually can cause an awful lot of problems with the wider team. I've seen this two or three times on my journey over the years. We had a hotel a while ago and we had an individual there for a while who really didn't agree with anything we were doing so they bad-mouthed almost everybody and caused no end of problems. I’ve also seen it in a retail business I was involved with. It was the same thing again, somebody in the team who was fundamentally unhappy with her role, she wanted a different role that we weren't able to give her, even though she was doing the role we'd recruited her for. She was so negative and that kind of that bad energy pervaded the entire team and the whole team ended up unhappy. 

I know it's not a nice thing to have to say goodbye to somebody. But you've got to think about your business and the team you have and also that person individually; if they are that unhappy in their role, they might not want to be pushed but that role is not right for them. Obviously, you do what you can to resolve those issues between you first, but once you've tried those things, if you can't resolve the situation, you have to take action and say goodbye to that person for the good of them and the business and the wider team.

I'd be really interested in knowing if any of you have had a similar experience, particularly working with team members, so feel free to drop some comments below. And also if you've got any other tips for other entrepreneurs, please put them below. We'd really love to hear from you and love to know your thoughts. 

So that's the first two points -  working harder not being the answer and taking your medicine early. Which brings us onto number three. This actually was the hardest one for me personally to get to grips with, which is: you can't please everybody and you really shouldn't try. 

Now I'm somebody who likes everybody to like me, which is very difficult because in business and in life, you're never going to get everyone to like you because we were all different! And it's not a criticism that someone doesn't like you, but if you try to please everybody, in a way, you end up pleasing nobody. You’ll take actions which aren't the right ones. You don't take tough decisions. You come up with products or services which are perhaps bland and or because they’re designed to appeal to everybody, they don't really appeal to anybody.

We find that even on TV and I'm not going to single out any particular shows, but we’ve all come across, for example, comedy shows which are on at times when the most people are watching across the country. Because they don't want to offend anybody, they end up being quite bland. And it's exactly the same in business. It all comes down to focus and particularly thinking about customers. You can't can't sell to everybody. And if you try to, as I say, you end up, you know, pleasing nobody.

Another example connected with is actually one of the other businesses I had over the years. I had a really nice hotel on the south coast of England. It was quite small, it only had 11 bedrooms but it was quite premium; we were probably charging an average $250 a night for a room. And when we took over that business, which wasn't particularly working well, we didn't want to rock the boat because we were learning the business. But we did want to try and get some more people through the doors.

So we decided to run a load of promotions with different partners to get as many people through the door as possible. But we quickly found out that not every sale was equal, and every customer was not equal in terms of value to our business. And what we found was by trying to appeal to everybody, we found that people who came in who'd paid a fraction of the normal price because we'd done a huge deal actually were the people who were hardest to please because they wanted the most for their money. They were the ones who wanted the free champagne in the room and free chocolates and free late checkouts and all of that. And they were the ones who were quickest to complain if we didn’t make them happy. 

It was only when we took a step back and thought ‘what kind of guests do we want?’ and then targeted those people that the business really turned around. Our guests were happier, profits went up, the staff were happier because there were less complaints. Everything fell into place by focusing on a specific target customer rather than trying to please everybody.

So that's number three. Number four, and this won’t surprise you that I'm saying this because, as I've mentioned, I am an accountant, is that every penny really does count. And you shouldn't take your eye off the expenses. There's a real temptation to focus on top line growth, (ie revenue/ sales)  but what we find is in a lot of businesses, people pay less attention to what's going out the other side of the business, what you're spending your money on.

We also find quite often the costs within the business start to creep up over time because you've taken your eye off the ball, and so actually whilst your sales might be growing, your profit won’t be growing anywhere near the same proportion. And this is equally important when your business grows and you have a team - that’s when you need to instill an ‘every penny counts’ culture with them. Every dollar that you spend in your business has to deliver a return. Everything. 

The final point may seem a little bit off the wall, and it's perhaps you might think, where's this coming from? But it's to do with cash and it's to do with taking money. Right? I want you to be very careful about who you take money from in your business. I'm talking about investment on what terms and why you're taking that money. Because (and I've seen this time and time again) businesses who take money from people whose objectives are not aligned with theirs as a business owner can be a disaster long term. Similarly,  people who need money to pay bills right now and take a loan on whatever terms they can get because they need money today without any thought of when they're going to be able to pay it back can also cause a huge problem.

If you don't think about these things upfront, they're always going to come back and bite you in the rear. I'll give you a really personal example here. One of the businesses that I worked with a few years ago, was a retail business that was growing really nicely, but it wasn't quite profitable. So we needed a smallish amount of cash in the grand scheme of things literally to tide us over for six months until we broke even. But because the business wasn't profitable, we were struggling to borrow to raise money. We eventually found an investor who was a very wealthy individual who was prepared to put money in the business but on quite aggressive terms.

So he bought some shares (aka equity), but he wanted a seat on the board. He also wanted to have a veto over certain key business decisions and to have a certain amount of time with management every month and for his ideas to be heard, which you might think at the start doesn't sound that unreasonable.

But actually the problem was that his objectives, specifically when he wanted to get his money back, were completely misaligned between the other owners who wanted to make a bigger, longer-term return. He wanted his money back as quickly as possible. The other shareholders wanted to grow the business for a good two or three years and make it really big. And because his objectives were misaligned, board meetings were a nightmare.

It also didn't help that he was quite an aggressive character, at board meetings strategic decisions could not be made because he kept blocking them. It wasn't his fault, but his objectives were different to ours within the business. And so it's really important to understand those objectives when you're taking money from somebody. Also, you need to think to yourself ‘Is this somebody I can work with?  Do I get on with them and do I think they can add other value to the business? Can they open other doors for me?’

So anyway, there we are. There's just five things I really wish I'd known before I started out. As I say, mistakes that I'd made over the years. I hope you find those helpful and do drop me some comments below. As usual, what I've done is I've put those five key, key points down in a free fact sheet, which you can download below.

And also before I go, I also have another free factsheet, which I’d really like you to download, and it's all about turbocharging your cash flow in your business and doing so without selling a penny more.

So if that's interesting as well, click the link below and download it. And if you've not done so as yet, as I mentioned earlier, please subscribe because I'm posting new content every week and I'd love to be able to share that with you. Well, thanks very much for listening. I appreciate your time and I look forward to seeing you in the next video.