Having been a non-employee for about 14 years now, I’ve made my share of stupid business mistakes.  I’ve also coached a number of people to start their own businesses, and I’ve seen many of them make similar mistakes.  This advice is geared towards small business owners, particularly people who are just starting (or about to start) their own business.

1.  Selling to the wrong people.

While sales are important to the survival of any business, you don’t need to push your business on everyone you meet, including friends and family.  Furthermore, it’s a waste of time to try selling to people who simply don’t need what you’re offering.

Selling to the wrong people includes trying to sell to everyone.  Some customers are much easier to sell to than others.  For example, my wife does web consulting for small businesses, and she’s learned that some clients are much harder to work with than others.  If a potential customer is broke and obsessively worried about every nickel they spend, if they want a web site but don’t know why, or if they simply don’t understand the Internet well enough, they won’t be a good client in the long run.  Feel free to say no to customers that are more trouble than they’re worth.  Let your competitors sell to them instead.  You’ll save yourself many headaches, and you’ll free up more time to focus on serving the best customers.

Just because someone is interested in doing business with you doesn’t mean you should accept.  In my first year in business, I probably said yes to at least 50% of the people who approached me with a potential business relationship.  I wasted a lot of time pursuing deals that were too much of a stretch to begin with.  I accepted lunch invitations from random business people who just wanted to “see if there’s a way we could do something together.”  Virtually none of them made me a dime.  If you think a meeting is pointless, it probably is.  Don’t network with random people just because you think you’re supposed to network.  Today I accept such invitations less than 1/10 as often.  If an offer doesn’t excite me right away, I usually decline or ignore it.  Most relationships simply aren’t worth pursuing.  Learn to say no to the weak opportunities so you have the capacity to say yes to the golden opportunities.

2.  Spending too much money.

Until you have a steady cashflow coming in, don’t spend your precious start-up cash unless it’s absolutely necessary.  I started my computer games business with about $20,000 cash (my own money), and it went fast; shortly thereafter I was using debt to finance the business.  Unfortunately, the original business model didn’t work, and it took five years before the business was generating a positive cashflow.  I soon learned that every dollar invested in the business was another dollar that eventually had to be recouped from sales.joozone.com