Some businesses are doomed from the start.
Even if the concept behind them is not inherently flawed,
they never recover from decisions made – or decisions not made – before the first
day of trading.
The annoying thing is that many of these mistakes are easily
avoided, given just a little thought and preparation. They are, however, very
hard to correct once operations have begun.
Here is a short checklist of foreseeable problems that can
sink an otherwise sound business within months of start up:
– the single greatest cause of business failure is underestimating the need for
a secure cash reserve;
2 Focussing on the
product or service and not on how to sell it – possible the second greatest
case of business failure;
3 Overspending on
fripperies that can have no immediate impact on the success of the business in
the crucial first few months;
4 Inadequate legal
structures - irrespective of how well
you get on with your partners, clear boundaries are the only way to prevent the
disputes that always develop as a business develops;
financial controls – book keeping must be rigorous to the point of fanatical
from Day One because there is little chance of catching up later if you let it
management structures – employees will take advantage if it is not clear from
the start who is in charge; and
7 Lack of definite
purpose or strategic objectives – without a sense of direction, an enterprise
will wander from one project to the next until it folds.