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Small business blunders to avoid

Industry News

Not hiring smart is at the top of the list.

wsj.com | January 6, 2012

Survival has been the operative word for small businesses these past few years. Many of us hope the worst is behind us.

During the past several months, I've been on a nationwide book tour, which gave me the opportunity to speak to thousands of small-business owners. I was happy to hear cautious plans for growth in 2012 from some entrepreneurs, but most remain nervous about what lies ahead.

Now, usually at this time of year we all start thinking about New Year's Resolutions. We pledge to make changes personally and professionally to enhance our success.

Faced with continued economic uncertainty, it's tough to know what those resolutions might be for our businesses. So let me suggest that as business owners we resolve to run our businesses smarter this coming year. Let's make well-thought-out decisions so we avoid making mistakes.

Here are a few common errors business owners make:

Not Hiring Smart

There are indications that small businesses will start to hire again this coming year. After working with little or no staff, many entrepreneurs find themselves in need of an extra set of hands to grow to the next level.

Not knowing exactly how to find the right employee, many owners resort to hiring a friend or a family member. (Big red flag!) Typically, your family and friends don't have the skills, experience or dedication you need to really grow your business. If and when it doesn't work out, it can ruin the friendship and harm family relationships.

Friends and family members often have good intentions when they want to join your team, but it is difficult for them to set the personal relationship aside. You're still their buddy, BFF, cousin or sister/brother.

And, as the business owner, you trust them with a handshake and a smile, as opposed to following good operational practices. That's where the problems begin.

Rob Lewis, founder of U.S. Equipment Sales Inc., a used construction, recycling and demotion equipment sales company in Tampa, Fla., is still dealing with the aftermath of hiring a friend of more than 17 years who needed a job.

Lewis was familiar with noncompete agreements but says, "I decided it wouldn't be very best friend-like to make my friend sign one."

At first, everything went smoothly. But as time went on, the friend's attitude and work ethic changed. "He was spending days at home instead of working and would lie about visiting or calling people," Lewis says.

When the friend's sales fell completely flat, Lewis got suspicious and discovered his friend had started his own company and was funneling customers to that business.

"Among my biggest mistakes, I showed him how to essentially keep ahead of the competition while spending a small fraction of what they do," he says. "I'm still torn between the possibility of losing half my customers or having to resort to litigation." The business does a little under $2 million in revenue and this friend was Mr. Lewis's only employee.

Always remember, business is business and friendship is friendship. It you are thinking about hiring this year, make sure you hire smart. Find the person who has the right job skills and experience to help your business grow.

For the rest of the article, click here.
 

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