Monthly Archives: January 2014

Bad Business Ideas & Business Idea Mistakes

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If you think about it, some very unusual business ideas have worked in the past. Conversely, it often happens that very common business ideas actually do not work. There are a few key reasons like overall strategy, positioning, marketing, degree of hard work, perseverance, availability of resources, timing, product quality, market and economic conditions, and much more.

As an example, consider a very common type of business: a restaurant. Many restaurants have been successful in the past while many have also failed. There are many things that have to go right starting from the planning stage. For example, if the restaurant is in an area where there are not many people passing by, it will be difficult and costly to acquire new customers. If the food is not great or too expensive for its quality, the restaurant will not have repeat customers and get bad online reviews which will work to turn new perspective patrons off. There are many things that can go wrong. The staff may be unfriendly. The economy might be weak. A better restaurant can open up next door. The business can run out of money before it breaks even. Or the founder just did not have enough knowledge or experience in the industry which caused too many mistakes to be made along the way.

So to make this kind of business successful, the founder has to make sure that as many of these issues can play in their favor than hurt them.

Mismatch of Business to Founding Team

Different people have different strengths. The founder does not have to possess all the core skills that the business requires. But together the nucleus of the founding team does have to possess the core skills required by a business.

For example, Internet/tech businesses typically require the founding teams to have a tech background. Food-related businesses require culinary or hospitality industry background. Product-centric companies require ability to make great products and sell them. Some businesses need to raise a lot of money while others need to get a lot of publicity. The founding team must have the skills for whatever the business will require.

If that is not the case, that will make the business more of an uphill battle.

Lack of Experience In a Field Requires Approximately 6-12 Months of Learning the Industry

If the founding team does not have strong experience in the industry in which the business idea is in, that will necessitate a lot of learning on the job, which will in turn cause many errors and steps in unsure directions. Small errors are not difficult to recover from, but gross mistakes can be very costly in terms of time and money. Before having to pay for these mistakes out of the bank account of your own business, it may be better to do some work in this area as an employee, or maybe start with a smaller project just to learn the ropes cheaply.

A common mistake is that people try to quickly go big in a business area where they do not have enough experience, which can be very damaging to the business. The bigger you try to go, the bigger and more costly the mistakes will be as well.

Lack of Circumstance-Idea Match

Sometimes the business idea is just too dependent on market and other outside conditions. If those conditions are not favorable to the business, it can be time to reconsider the business. Of course, conversely, most business types are cyclical (that means their success correlates with timing of the overall economy which tends to go through good and bad multi-year cycles).

So think about how the global and local economies will affect your business. Not taking that into consideration can leave you with significant risk.

Should You Protect Your Ideas

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There is always quite a bit of discussion and debate over the topic of protecting business ideas. Some people argue that you should keep it a secret while others insist that you should be free and open about it. The correct approach is likely somewhere in between the two extremes. If you are curious about this topic, take a look at our article about protecting business ideas.

Another option business owners have to protect their businesses is something called the non compete agreement which prevents the employee from stealing clients or going to work for companies that are directly competing with your company. Here is the full article on the non compete agreement.

Not Starting Your Business

One mistake people make is that they wait around for a source of funding for the business idea. Unfortunately, almost all the time, funding never comes to people who wait for it. And that causes the business never to even exist. To combat this type of a phenomenon, we recommend that you do something called bootstrapping. Here is a video on bootstrapping.

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Startup & Business Ideas Book

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I am excited to announce that I have published my first business book. Here is the link to the book on Amazon, and here is the link to my course on starting a business. When you get the course through this link, you will get a discount that is over 50%. The course has much of the same information as the book. The main difference is that the course is video-based.

Let me tell you why this is one of the most necessary books for first-time entrepreneurs. In this book, there is a balance of theoretical advice on solid business fundamentals, and real world case studies.

This book is the first in a 2-book series. After you learn how to start a business with this book, the second book teaches you how to do marketing like a pro, and get clients. Here is the link to learn more about the marketing book.
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Protecting Business Ideas With An NDA (Non disclosure agreement)

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Most people who start a business are private about it in at least some capacity. Even people who are relatively open about their business still do not want to disclose absolutely everything about what they are doing, and want at least some degree of privacy. In this post I will explain how you can protect your business ideas with legal mechanisms such as NDAs (Non-disclosure agreements) and a few common sense techniques.
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How To Pursue Your Business Idea If You Have A Full Time Job. Should You Quit Your Job?

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We all have to work to pay our rent. When people get struck with an interesting business idea, more likely than not, that are probably already working at a full time job. This puts them in a dilemma. And there is really no simple solution. If they pursue the idea on their free time, which for most people is mornings, evenings, and weekends, their personal life suffers, and in any case, that time is really not enough to build a business. So the business moves along very slowly. Plus, some of the most productive time of the week is given to your job and not your business. If people choose the other option, and quit their job, they take on a tremendous amount of financial risk, and add finance-related stress to their lives. Risk sounds fine as long as you imagine it, but you do not want to be on the bad outcome of a risky situation. It is not fun at all. So think long and carefully before you make such a decision.

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