Like every start-up entrepreneur, Rodney Nelson needed a great website. Woolly Pocket, the company he was building with his brother, Miguel, aimed to sell its cleverly designed, eco-friendly wall planters online. But there were problems.
“Our first site didn’t follow the standard design protocol of a good website,” remembers business management consultant, Nelson. “It was difficult to navigate; customers had to scroll all the way to the bottom of the homepage and then to the next page to find ‘buy it now.'”
The brothers moved on to another developer, but their second e-commerce site didn’t work well either, and they found it hard to get the tech team to respond quickly. “The initial rate was affordable, but we had to redo it maybe six months later,” Nelson says.
“The second time it cost double; we were happier with it, but we weren’t ecstatic. Then we went to another company about a year later. We did three websites in one year. In the end, we’d done four websites in one and a half years before we got one that worked.”
It might not be your website that ends up costing you dearly, but something will – it’s the Murphy’s Law of start-ups. There are a seemingly endless number of ways to spend money, and it’s impossible to be wise about all of them. But a few common costly mistakes can sink a bootstrapped business.
Here are six pitfalls to look out for, along with expert advice on how to avoid them.
Expensive mistake 1: The wrong team
Bill Aulet, managing director of the Martin Trust Center for MIT Entrepreneurship and author of Disciplined Entrepreneurship, says choosing the wrong team is the single costliest error entrepreneurs make, resulting in not only lost income and time but depleted morale.
“Choosing who to hire and work with in a start-up is like playing sports at school; you can pick your friends and play for them, but if you want to be good and continue to be on the field, you have to carefully pick your team,” he explains.
It’s crucial to choose people with varying skill sets. However, Aulet says, “much like a great sports team, they must also share some common values and the ability to trust each other in tough situations. That’s why past experience working with your co-founders and early employees in stressful times is much more important than being friends.”
Expensive mistake 2: Bad pricing
“My single biggest mistake with my first business – a handbag company – was in pricing,” says Sarah Shaw, CEO of consulting firm, Entreprenette.
Hers is a common misstep for product manufacturers.
“I didn’t understand that with any kind of clothing or accessories, you have to calculate the square footage of fabric, including the wasted fabric,” Shaw explains. Without an accurate understanding of her costs, she couldn’t price her products correctly.
“I thought you sort of doubled everything, but that’s not correct,” she says. “It’s a 2.5-times mark-up from cost to wholesale, which covers marketing, the showroom fee, all your expenses.”
By the end of her first two years in business, Shaw had put in more than $100,000 of her own money. Thanks to perseverance and media buzz (celebrities loved her bags), she ended up with $1 million in annual revenue and attracted investors, but she couldn’t recover from the downturn after 9/11 and closed the business in 2002.
Expensive mistake 3: Waiting for perfect when good will do
When you’ve got a killer idea, it’s natural to want to introduce it to the world in a fully formed state. But it doesn’t take a chartered accountant to figure out that the longer you take to launch, the longer you go without money coming in.
“This is a common mistake, especially for tech people,” says Drew Williams, co-author of Feed the Startup Beast. “Many want to build an app and won’t let it go until it’s perfect, but then you take too long and spend too much.” Specifically, this error will likely leave you with no “runway” – the cash you’ll need to sustain you as you’re trying to get your product off the ground once it’s ready, but before you have customers.
“You need to come up with the simplest, basic version of your product that gets the idea across and try to find someone you can sell it to,” Williams says.
“Find one or two clients who are willing to do a pilot where you build, test and iterate it. Inevitably, your product will be different than what you expect, and then you build it. If you get a real, live client, you create a better product in a very cost-effective way.”
Expensive mistake 4: Not understanding technology
Mary Juetten was no Luddite when she launched Traklight, a software company that helps individuals and businesses identify and protect intellectual property, but she didn’t know everything. “I understood how to lay out what our software would do… but I didn’t know anything about coding software or web development,” says chartered accountant, Juetten.
She relied on a co-founder with that expertise, but when that relationship ended, she floundered.
“This is where I made my biggest mistake: I looked for the best deal, and I didn’t educate myself about different programming languages or bring someone else into the mix.”
The team she hired to create Traklight’s software told her that it “couldn’t” be built in one programming language and “had” to be built in another. “If someone designing my website came up to me and said, ‘You should use this colour instead of that colour,’ I’d be asking 17 questions about why,” Juetten says. “But I never asked why about this, because it was technology.”
The four-month window for software development turned into eight months, then nine more. “With technology, it’s all about time to market,” she says. “So entrepreneurs who are not technical should educate themselves.”
Expensive mistake 5: Skimping on lawyers
Tobin Booth, CEO of Blue Oak Energy, an engineering and construction firm for solar photovoltaic power systems regrets skimping on legal fees in his company’s infancy.
“If I could do some of the early stuff over, it would have been to pay a few thousand to have a lawyer write up a proper contract,” he says. “I didn’t have the right attorney who really understood my business.”
A few early customers simply didn’t pay up, so Booth tried to move matters to a collections agency. “I found out that there were some clauses [in the contract] that didn’t allow me to collect on legal fees,” says Booth.
Shaw, meanwhile, unknowingly signed a contract that gave her handbag company the trademark to her name, so when investors came in, her name belonged to them. “I can’t use my own name in business again,” she says. “I wish I had hired an lawyer to watch out for me.”
Expensive mistake 6: Being cheap about marketing
“People think, everyone else has to market their product or service, but I don’t because this is so good,” says author Williams. The related myth is that you can rely on social media to build virality and attract customers for free.
“Social media is not free,” he says. “To do it properly takes unbelievable amounts of time, and it’ll typically take six months to a year before you’ve got even slight momentum – it’s not fast.”
If you’re not sure how much money to budget for marketing, Williams suggests aiming for 10% to 20% of your targeted gross revenue. “As you become a more established business, that drops to 5% to 10% of gross revenue, and for the largest businesses it’s typically 5% or a bit less,” he says.
After launching Traklight, Juetten found that her website wasn’t indexed properly for search engines. “No one was finding us,” she recalls. So she decided to invest in an inbound marketing program. “That initial payment is scary for a small company, but we don’t have to pay developers to make changes to our site, and they do e-mail marketing and CRM,” she explains. So far it’s working: In April 2013 the Traklight site recorded just 100 visits per month; by the end of the year it was getting 2,800.
How much does Juetten estimate she lost early on between the missteps in software development and inbound marketing? “As far as money thrown away – actual cheques written for useless things – that would be in the tens of thousands,” she admits. “As far as lost time [and] products not developed on time, it’s in the hundreds of thousands. We would be much further ahead now.”
In the end, the best way to avoid costly mistakes is obvious: Save and spend wisely. “Keep spending really, really tight,” Williams advises. “Leverage everything you can and give yourself as long a runway as possible. You’re going to need it.”
3 Companies With Memorable Slogans, And How To Create Your Own
Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.
A good slogan serves many valuable roles in business. First, it reinforces recognition of your brand. After hearing it a few times, your consumer instantly thinks of you when hearing it again. If it’s catchy enough, they may even find themselves saying or singing it in their head, reinforcing your brand even more.
Slogans also share a little bit about your company. For instance, if your slogan is funny, it says you have a sense of humor. If it contains your goal or mission, it tells the consumer what is important to you. Some slogans share the problems the company is trying to solve or the consumer its trying to help, making it easier to identify the target market.
Finally, a slogan sets you apart from your competitors. It differentiates you from all of the other companies who offer similar services to you. And if it’s memorable enough, it puts you ahead of them in your consumer’s minds.
Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.
Company #1: Nike – Just Do It
Though many people use Nike’s ‘Just Do It’ slogan as a reminder that they can do amazing things if they just put their mind to it, its author, Dan Wieden, reports that this line actually has a grim beginning.
In fact, it was an idea he derived from a statement made by Gary Gilmore, a double murderer who, before being executed by a firing squad exclaimed, “Let’s do it!” Still, it has stuck in consumer’s minds and is undoubtedly one of the most memorable slogans of all time.
Related: Registering a Trademark
Company #2: Carlsberg – That Calls for a Carlsberg
Initially, Carlsberg’s slogan was ‘probably the best beer in the world.’ Many consumers came to know and love this slogan; however, in 2011, the company rebranded and created a new slogan: ‘That Calls for a Carlsberg.” The goal of this new slogan, according to CEO Jorgen Buhl Rasmussen, was to encourage the consumer to do good things and then enjoy a Carlsberg after as a reward for a job well done. Both have stuck in the minds of consumers, albeit with some discrepancy as to which one is most preferred.
Company #3: Apple – Think Different
Apple is a company known for thinking (and creating) outside the lines, so its ‘Think Different’ slogan fits it perfectly. According to Rob Siltanen, creative director and managing partner at the company that helped design this Apple pitch, though there are many accounts of how this slogan was created, its true inventor is Craig Tanimoto. Siltanen says that Tanimoto came up with the idea to use black and white photos of some of the most revolutionary people and events of all time and, atop each one, simply display the words ‘Think Different.’ Catchy, right?
How to Create Your Own Memorable Slogan
These are just three examples of how creating a memorable slogan can help your company get — and stay — in the minds of your consumer. So, how do you come up with this type of campaign?
One option is to get some of your company’s best talent together and see what slogans you can come up with. Have everyone submit one or two ideas and talk them out. See if any jump out at you and, if not, use them to inspire you to come up with even more possible ideas.
Another alternative is using a slogan generator. This enables you to come up with a simple, memorable slogan using keywords related to your brand. Just go through the list and of results and see which ones stand out. You could even pick your top two or three and let your social media followers vote as to which one you should select.
If you find yourself at a dead end and unable to come up with a memorable slogan, or if you lack the creativity or the time, you can also hire a marketing firm to help. Give them a little insight about your company and see what slogans they create. It may cost you some money to take this route but, as companies like Nike, Carlsberg, and Apple have taught us, a good slogan can really propel your brand.
Dear Family And Friends Of Entrepreneurs…
Young entrepreneurs often struggle to establish their businesses as they are not getting the support they need. Sometimes it is not only the obvious support of financiers and supply change developers which is lacking –but also not having that critical “home-ground support” can negatively affect the success of your venture. How can family and friends support entrepreneurs?
Entering the market as a newbie entrepreneur is a brave step, and having your family and friends share in your vision for success is critical. Once you have convinced them that being an entrepreneur is in fact “a real job” – one that requires a lot more sacrifices and hard work than a salaried worker – you can continue to encourage them to support your journey, to ultimately share in your success.
Get a job
In some communities, being an entrepreneur is not recognised as a profession. Therefore, those who pursue enterprise development are seen as irresponsible or lazy as it is not regarded as ‘real’ employment. Societal pressure to attain certain material possessions thus prevents them from pursuing their true passion.
This kind of resistance discourages a lot of entrepreneurs, making their pursuit for success even more difficult.
Finding out who your real friends are
Financial support is the most obvious support needed by entrepreneurs due to a lack of capital and start-up funding, as well as irregular payments and long periods of being cashless due to procurement holdups and fluctuation in the market for your product or service. Not everyone will stick with you in these times – and that’s OK. You may end up finding out who your real friends are, and these are the people who will give you emotional and social support to keep you focused and motivated.
“I know a guy….”
Another issue is friends and family looking for discounted prices as they know the owner. This means that they don’t see the value of the product or service, nor do they respect the owner. By asking for products and services for free, or at a reduced price, they end up taking advantage of their relationship with the entrepreneur and do not financially support his/her the business.
So, if you have friends or family who are business owners, set an example by supporting them in the following ways:
- Be willing to pay the full price of the product or service offered.
- Be kind when giving negative feedback – make sure it is constructive.
- Compliment them on good products or service. Share positive reviews on your social media pages.
- Share and promote their business among other people.
- Be patient and willing to help them establish their businesses.
Be prepared to listen to their dreams, hopes and frustrations. Sometimes, they just need an ear to vent about a bad day. Support them with a word of encouragement to keep going.
Why Embrace The Struggle?
Entrepreneurial success hinges on your ability to approach challenges with the right mindset.
Self-help and business coaching advice is littered with platitudes, which makes it difficult for entrepreneurs to know what they should take to heart. However, one universal truism that most successful entrepreneurs attribute to their success is their willingness and ability to endure the struggle.
It’s a lesson I learnt first-hand when building our ad-tech and Facebook Marketing Partner business, Popimedia. One of our sternest tests came when we moved into new premises and took on more staff to accommodate our exponential growth. Then, amid new and significant financial commitments, some of our pipeline never materialised.
It was at this time that my son was born, and our family had just moved into a new house. To preserve the business, we were forced into retrenchments and directors didn’t take a salary for a while. And, with a lower head count it became difficult to deliver on client deadlines. Needless to say, my personal and professional level of discomfort was at an all-time high.
We reviewed our operations and streamlined where we could. More importantly, though, the experience taught us a number of invaluable lessons.
Lesson #1: Reframe your context
Our leadership approach, our business mindset and our attitude needed to be drastically reframed.
There is a quote that has always stuck with me, which is: “The antithesis of comfort is struggle.”
I believe a person is moulded by the way they deal with struggle. That’s why I’ve always been inclined to welcome a proverbial punch to the face, and use as a mantra the phrase, “comfortable being uncomfortable”.
Being “uncomfortable” forced Popimedia into rapid innovation – and it was this innovation that led to a sea-change in the business. We learned how to scale, how to improve service levels, how to do what we do better, faster, more efficiently.
As a result, and without increasing our staff complement, our year-on-year growth has topped 100%. What was, at the time, the business’s greatest challenge became its greatest ally, and our biggest lesson.
Lesson #2: Fail fast, and learn from it
Obviously, this approach is not about making life difficult for the sake of personal and professional growth. It’s about understanding what is: expecting it to be difficult and taking a constructive approach towards failure and struggle.
There is one guarantee in business: you will experience failures, and you will struggle.
Central to this is your ability to recognise your failures for what they are, and quickly. This allows for a rejigging of processes, attitudes, operations, and sometimes even objectives.
My personal attitude to failure was reframed by simple sales stats. I came to understand that rejection was inevitable – but when it does happen, it brings with it opportunities. I always ask: “Why don’t you want my product? How is it not meeting your needs?” This way, “failure” is transformed into an opportunity to better understand the market and my clients.
This feedback loop has proved crucial, and allowed us to become what we are.
As an entrepreneur, the pressure never ends and you’ll never ‘arrive’. At Popimedia, we’ve come to embrace every opportunity that takes us out of our comfort zone. Working through failure is the foundation on which the entrepreneurial spirit is forged. It is the willingness to try again following a rejection, or to keep grafting knowing that there’s no guarantee of a pay cheque at the end of the month.
And doing so with the ‘chutzpah’ – the sheer audacity – to endure the hardship through mental toughness and a passion for what you do, becomes your greatest asset, because when you get comfortable, you become complacent… and complacency will work you into irrelevance.
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