Things will make you lose you business (Part 1)

This is not the first time to have a business for my own. I lost the last one for many reasons. Some of them were out of my hand. But there are man mistakes I made too. Losing your business is not the end of the world, yet you can go forward work for others or start another one. Here are few mistakes I want to advice anyone trying to establish a business to keep away from:

Mistake 1: Being a friend for your employees

You should communicate to your employee with respect and be open minded when you are talking to them. But don't make them your friends. When you become a friend to someone you keep trying to not heart him. This will lead you to the point where you cant tell them that they busted in the task you assigned to them. So always keep distance between you and them.

Mistake 2: High Running Costs

In general business which depends on services have a higher running cost. But this don't mean keeping it that high. When your share in the market is low and the income is very low, don't think that paying the salaries and the rent from your own pocket will solve the issue. The best way is to cut your expenses. Do a layoff, rent a smaller place, don't use the AC, do anything to cut the expenses, but don't pay them from your own pocket.

Mistake 3: The Loans

Keep away from them. Don't slip into that hole. Loans are dangerous, especially when your market share is very small. At the end of the month if you don't have enough money to pay your monthly payment, the bank will multiple it by 1.8 or 1.9. And if another month passed and you didn't pay. This means that you slipped into the tar pits.

When you take a loan, you should be sure 300% that your income will cover the monthly payment. If you have a doubt for 1% that your income will not cover it, don't take it. In case at the end of the month you have enough money for the salaries or the loan payment, pay for the bank and ask your employee to wait a little bit.

Mistake 4: Be Optimistic

Always take you decisions while you are calculating for the worst case scenario. This way you will be preparing for the worst. If when the good things come, this means you will be very happy.

Mistake 5: Trusting your partners more than the right limit

It is good to trust your partners. This is the thing which make the company going forward. When you lose the trust on them and you stop believing on them it is better to break the partnership before thing start to turn ugly.

And always keep everything on paper. In case some of the partners said he will take the risk of a certain decision, sign him/her on the responsibility of that decision.

On another post I will tell you more about things you have to be away from...