Beach: 5 ways to kill a small business

Small business, startups and entrepreneurs are the backbone of the economy and the foundation of wealth in America. Do business right and you can be incredibly successful. Break a few simple rules and failure is almost guaranteed.

1. Don’t have a plan. It doesn’t have to be a formal business plan, but every startup, entrepreneur and business needs a plan for success. Every business needs to be able to articulate (verbally and in writing) the answers to basic questions.

What is the problem and what is the solution? Who are the customers and how will they be reached, persuaded and sold? How will the business make money? How much profit will the business make? If you can’t answer those questions, your business is likely to “crash and burn.”

2. Don’t focus. You can try to be all things to all customers, but that is a recipe for failure. Google started with one focus – being the best search engine. Apple started with one computer. Chipotle Mexican Grill has a very limited (one product) menu.

Focus on one core product. Conserve your resources until you understand your customers, your market and can develop the one product that solves their problem. With just one superior product you can focus all of your resources on being the best. The best always generates more interest, more attention, and makes more profit.

3. Ignore the numbers. If you want to live dangerous, go with your gut feeling and just “wing it.” But gut feelings are subjective and usually wrong. It is not necessary to spend hours collecting information and have dozens of spreadsheets for analyzing it.

Find or create five meaningful metrics that you can easily monitor – daily or even hourly. Use those to constantly monitor your business and regularly make small adjustments to make your business more successful and more profitable.

Make sure that some of those metrics are “leading indicators” – those measurements that predict the behavior of your business. The number of sales calls is an indicator of the number of appointments, which is an indication of the number of sales, and an indication of revenue and profit. Therefore the more sales calls the more profit. The number of sales calls is a leading indicator of revenue and profit.

Engineer your profits by managing from your leading indicators.

4. Spend your company money on yourself. When the business is flush, the temptation is to spend the money on your bills. Don’t. The company money is the company’s money – not your money. Don’t mix the company money with your personal money. Get separate bank accounts and keep them separate.

Don’t pay the company bills from your personal accounts, and don’t spend the company money on personal things.