Are Human Beings Naturally Bad at Business?

Most people start out struggling. And while the survivors spend a lot of time talking about their success, about eighty percent of businesses don't survive their first five years. The reasons are pretty predictable to anyone who has survived ten or fifteen years.

Every once in a while, I find myself in a conversation about the things I did "wrong" when I started my business. The short answer is, almost everything. And almost everyone else has the same experience.

I was lucky to get a few things right, based on my business experience before I jumped into IT. I had managed large computer systems across several states. I had multiple jobs where I had managed a staff of twenty-five or more. I had managed budgets and projects.

But I still got a lot of stuff wrong. My previous experiences didn't lead me to a philosophy on how money flows inside a business (I only managed one isolated piece of the puzzle). And virtually all of my experience as an employee led me to value workaholism in search of a reward.

But the ultimate lesson of workaholism is: The reward isn't as big as you'd hoped, and the goals will be increased next year. Ultimately, the result of workaholism is that you'll burn out and be tossed aside for someone will to kill themselves and destroy their family in search of rewards that never quite arrive.

Luckily, most of us learn quickly once we start our business. Unfortunately, we learn that through hard lessons. I call this an education with tuition paid in full. There are no discounts. 

Here are the most common things almost everyone gets wrong when they start out. Note: Most people have stopped doing these things ten years later, if they survived. Some continue the bad habits simply because they have become strong habits.

- We offer "terms" without even thinking about it. This means we do the work first, then send a bill and wait for payment. I have no idea why this is the norm. I did it. Most small businesses do. Today, one of my absolutely unbreakable rules for success is that we get paid in advance whenever we can.

- We work on a "handshake" instead of a contract. I think this comes from a natural tendency to think that other people are like us (good, noble, honest, etc.). Then we get clients who are unreasonable or don't pay their bills. I avoided this one. I came from a world where everyone signed contracts. But most people just start working without the guardrails in place.

- We work on a break/fix basis. This is almost universal. I started out taking jobs to fix networks, document networks, update systems, etc. I had come from a world of scheduled monthly maintenance, so I quickly got back to that. But it was still on a month-to-month basis and invoiced after. I got it right after a few years, and after finding the right clients.

- Workaholism. I think this is a universal human tendency. As I mention in my book, Relax Focus Succeed, we naturally act as if more work will always result in more output. But we also know that's not true. If you work to the point of exhaustion, much of your work is horrible and has to be thrown away. Then you get sick and fall asleep and have to recover. Reset. Got back to overwork.

- Workaholics push un-balanced behavior from the top down. When bosses overwork and have no work-life balance, they push employees to overwork and have no work-life balance. If they're lucky, they notice that they are forcing people out the door - resentful of the experience. Most don't notice.

- Don't take credit cards - But do give clients credit without a credit check, and sometimes never collect from those who owe the most. I didn't take credit cards for a long time because I begrudged them the three percent fee. But after a few bad experiences with clients who didn't pay their bills, I realized that getting paid in advance by credit card eliminated collections completely.

- Some people are greedy and short-sighted. Oddly enough, this is standard operating procedure with large companies. But it can happen in small companies as well. They take any money they can get now and let tomorrow take care of itself. Building long-term clients and long-term revenue streams is always better in the long run. But you have to have a vision that extends more than a few months.

- Capping sales commission. I've never done this or understood it, but I see it all the time. Like credit cards and being short-sighted, capping sales commissions just limits your future sales. When a sales person reaches their max, why should they sell more? There's no benefit to them. And you lose all additional revenue from additional sales. Makes no sense, but almost everyone is tempted to do it.

- And the newest behavior on the list is: Insisting that employees be onsite instead of remote. Unless you're in manufacturing or a job that requires people to physically be someplace, this is just a sign of bad management. When we can all be effective working remotely, there is zero reason to force people into the office except to keep an eye on them. In IT this is basically never necessary.

Eventually, we learn! We read books and blogs and advice. And we ignore them for a long time. But that tuition is always paid in the form of "lessons learned." Some learn sooner. Some later. 

What else would you add to the list?

And WHY do new business owners just "naturally" do things that are not good for their business?

:-)