To mark the beginning of the Year of the Dragon, this article will reflect on several more of the “classic business mistakes” that Duncan Bannatyne considers in his latest book. While the first is a repeat of previous mistakes, the others move on to consider the smarts that successful businesspeople need.Mistake #8 is the if I build it, they will come error. This is the hope that once created, whether via a high street store, an online business, or a manufacturing facility, the customers will start queuing at the door (or at your website). One of the lessons of the dot com era was that the existence of a business guarantees nothing. Another key lesson is that marketing is going to be critical to the success of the business as it seeks to grow.
Many times, I think, business people don’t really know what size their business needs to be in order for it to generate the kind of momentum that might relieve the desperation of finding every last customer one can. I certainly don’t know what it is in the case of Dragon College of Business and coming up with “the number” is made doubly hard by the fact that over-spending on marketing is often required to create any kind of impact on the market and that administrative and compliance costs quickly grow as new staff are required to manage the key back-office processes of the businesses. For what it’s worth, I’m going to guess that it’s two and a half times the current number of learners that we have, so that’s my target for the Year of the Dragon, 2012!
Bannatyne’s 9th mistake is that many entrepreneurs fail because they avoid the difficult tasks that appear either routine, boring, messy, or outside their comfort zones. He suggests that businesspeople learn to do everything in their businesses from serving customers to doing the book keeping. Here I disagree with him, to some extent. For one reason, if we are focusing much of our attention on marketing, we won’t be able to keep on top of every other process unless we have staff or have outsourced the process. Even then, Bannatyne’s view that we should understand all of the details also assumes that we have the time to do this. The bottom line is that without customers we are dead, at least in a business sense and also, in some ways, in other senses as well, so there is a need to depend on the expertise and experience of others, even if that means that we are a little more ignorant of the details than is ideal, at least for a while!
Duncan Bannatyne also advises that many businesses fail when their owners hide behind their desks, avoiding face-to-face interaction and instead hoping that Facebook and LinkedIn and Twitter and other social media will do the job for them. I tend to agree, to an extent. Many small businesses, particularly in the B2B sphere, must meet their potential customers and clients and need to network at local business meetings and so on. Again, however, one can waste inordinate amounts of time at such events. Last year I hired a guy for a sales role who seemed to spend his life “networking”. Despite this, he brought me only a very small amount of business and cost me more than his revenues brought in. It pays to be picky.
The 11th mistake is being stupid with equity. In an unsurprising view from a venture capitalist “Dragon”, Duncan Bannatyne suggests that it is okay to give away parcels of ownership in your company if this makes strategic sense and the new party is going to bring significant added value to the enterprise. This view is the polar opposite of another well-known UK entrepreneur, Felix Dennis, who advocates giving away nothing so that entrepreneurs can enjoy the fruits of their labour.
Who is right? This will depend on your situation. If you were given the opportunity of providing, say, 20% of equity in your business to a partner whom you knew could take you from revenues in the hundreds of thousands to revenues in the millions and beyond, I think you’d have to be a mug not to take the punt. If, however, someone you knew only modestly-well asked you for a share of the business on the basis of vague promises such as “I’ll get you into China and you’ll really get some growth”, I’d run fast in the other direction until they had some runs on the board.
The final mistake for this piece is not putting your own money in. Duncan Bannatyne suggests that entrepreneurs who “burn their bridges” with their old jobs and companies will be far more motivated to make a success of their enterprise compared to those who only do entrepreneurship as a sideline or who can return to a well-paid job as soon as things become tough.
I’m certainly with Bannatyne on this one. Starting a business is tough. That’s why so few people do it and far fewer actually succeed. As the story of the invading Greek General who set fire to his ships as his army entered a new land reminds us, if we’ve got everything to lose and we just have to win, our chances of doing so will increase immeasurably. We’ve just got to win…..whatever it takes.
