Don’t Do This

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What are the 20 worst mistakes you can make when setting up and running a business?

Anita Roddick, who admits she made her own errors of judgement during The Body Shop years, has some sound words of advice for potential entrepreneurs.

The business pages of newspapers over the last few years have been filled with some of the worst mistakes a business executive can make: Kenneth Lay at Enron, Dennis Koslowski at Tyco (who spent $15,000 on a hat-stand for his office) – even lifestyle guru Martha Stewart.

Whether they were actually guilty of crimes remains to be seen when they have their time in court (and Martha, of course, has just served her time). When you make the kind of mistakes in business that these guys made, the chances are you will be spending so long in court that you might as well move in.

But what about when you are starting out in business as an entrepreneur? The number of business failures are still running at 300 a week in the UK, the vast majority of them by entrepreneurs just starting out or facing the first major problem of their career.

Really, the number of mistakes that are available to new businesses are almost infinite, and I sometimes feel I made all of them. But, having done so, this is my top 20 list of things NOT to do.

Don’t take your company public
It is true that, given the right situation you can make an almost unbelievable amount of money doing this. But of all the mistakes we made at The Body Shop, this was the most fundamental, because – having been listed on the stock exchanges and having made our shares publicly tradeable – we were no longer in control of the company. We had surrendered our choice of how the success of would be measured: share price was now all that mattered. If we were too boldly ethical, or even slightly unconventional, the all-mighty markets would punish us. It is received wisdom that the shareholders own the company: once you take part in the great Wall Street casino, don’t you believe it. They don’t control it either. The crazy self-regarding system does.

Don’t ask your family for money
Whoever lends you start-up money has control, so it makes sense not to be beholden to your closest relatives. It can also put an intolerable strain on family relationships if you do. The last thing you want is for your company’s successes or failures to hang like a black pall over family gatherings.

Don’t employ management consultants
My own experience with management consultants at The Body Shop was exhausting meetings, increasing gulfs between staff and management, phenomenally complex corporate structures, and fractured relationships – not least with the consultants themselves.

Don’t deny yourself a wage
Part of being a successful entrepreneur means believing in yourself, and you deserve to be paid. You absolutely must pay yourself something or the whole enterprise is not sustainable.

Don’t deny yourself a life either
Another mistake entrepreneurs make is that they become so wrapped up in the business that they have no life outside it. If you get too inward-looking, it cuts you off from the sources of inspiration and correction that you will need. Obsessing about the business can send you mad: if it isn’t a joy to you, then really it isn’t worth doing.

Don’t forget to ask questions from people you admire
Being a successful entrepreneur means learning all the time, and it follows that when you meet somebody you admire – whether they are from business or some other area of life capable of turning the world upside down – it really pays to ask some questions.

Don’t try to emulate the corporate giants
Small businesses are not just small versions of large corporations. As a small business you have enormous advantages in flexibility and sheer humanity that the big corporates have long since left behind. It is also possible to have fun, which is absolutely vital if you’re going to have a creative company.

Don’t take the rules too seriously
Corporate men are keen on rules about how you should run companies and sell products. Don’t believe it: creating a human company, that customers and staff can relate to, sometimes means disposing of the rulebook altogether.

Don’t be over-awed by marketing advice
Customers are hyped out. They have been over-marketed. They are becoming more cynical about the whole advertising and marketing process. I learned that to educate and communicate in the contemporary business climate you have to be daring, enlivening, different and willing to take risks. Marketing needs to be about being able to communicate more sensitively and more persuasively with the consumer – talking with customers rather than at them. By creating a sense of conversation instead of branding, we let our customers spread our message by word of mouth with their friends and neighbours.

Don’t spend much on advertising
The sheer growth of advertising has made it ineffective. Everyone has learned to tune out the cacophony of advertising every day – they have to – so it makes sense not even to compete. If you bolster your brand recognition by a multi-million advertising campaign, you have to repeat it to counteract the efforts of your competition. You have to base brand recognition on something else.

Don’t forget how to tell stories
Every entrepreneur has to be a great storyteller. Storytelling defines your differences, and has some chance of spreading what you find exciting about the business to customers and staff.

We found that many of our products also had stories – their history, how they were conceived, where the ingredients come from, how they are made and anything else people might want to know. What are you most likely to remember, after all – some ludicrous advertising claim that you know to be a lie or the fact that the face cream you are buying comes from nuts gathered by a women’s co-operative in Africa? When it comes to stories about products, you find you are often in territory where the opposition can’t follow. If you can’t tell stories about your products – because the stories behind them are a sweatshop in the Far East – you are at an immediate disadvantage.

Don’t buy potted plants
They are expensive and clutter up an office.

Don’t even get an office unless you absolutely have to
Overheads are the death of small businesses. There really is no need for one these days.

Don’t be afraid to talk about love
Love is a vital force, and it is not too much to expect that you should love your job, or that your business should be breathlessly exciting enough that your employees love their jobs too. If your company is built in the mould of the big corporates, which can express no other emotions than greed or fear, then really you can expect

nothing more than guarded respect. But for a small company that reflects your personality as entrepreneur, and where you really concentrate on building the trust of your customers, it is not too much to expect yourself to aspire to their love as well as their trust. If you can let your own personality shine through, so that people who engage with the company are engaging with something human, not a glorified balance sheet, it can carry you through the problem years and the recessions.

Don’t be afraid of being opportunistic
Successful entrepreneurs don’t work within systems: they hate hierarchies and structures and try to destroy them. They have an inherent creativity and wildness that is very difficult to capture. But they keep their eyes open. Anywhere I go in the world, I am collecting ideas – which may have nothing obviously to do with business – and my mind is churning away relating to everything I am doing. It is a vital creative process.

Don’t get too obsessed by the accounts
You need to make a profit, of course. But if profit is the only objective, your staff drift away and you lose the thrill yourself. Equally, you need to judge staff by something other than precisely the money they earn. I measure people against myself, judging whether they have the same enthusiasm and energy. The yardstick is the creative time they put in. It may be a wrong yardstick, but I loathe the nine-to-five attitude. I don’t care if people are slightly chaotic. If they can motivate, that is the important thing.

Don’t just employ people like yourself
This requires considerable self-knowledge and honesty, but it is absolutely vital if you’re going to progress your idea into a successful business. You really don’t have to know how to do
everything because you can always find people with the right skills or money.

Don’t ignore people who tell you uncomfortable truths
One of the greatest failings in most organisations is that there is no-one to tell the emperor they have no clothes. Leaders must develop mechanisms that provide dissonant information and surround themselves with people who can operate effectively in the role of devil’s advocate.

Don’t assume male business people know best
There is no doubt that it can sometimes be difficult being an entrepreneur as a woman, but women do have an advantage. It is the older, larger corporations that are dying of boredom and losing millions of jobs. Corporations as we know them were created by men for men, often influenced by the military model, on complicated and hierarchical lines, and are both dominated by authoritarian principles and resistant to change. By setting up their own businesses, women can challenge these male-dominated corporate models. So don’t worry too much if you’re a woman wondering whether to risk your idea in the business world: the truth is that they can’t survive without you.

Don’t expect sanity from yourself
Entrepreneurs are not wholly sane in conventional terms. They imagine the world differently. That is their defining skill. So if you have a few foibles that raise people’s eyebrows, don’t be too concerned. It comes with the territory. As an entrepreneur, you need the ability to stand out from the crowd because you act instinctively on what you see, think and feel. An entrepreneur’s dreams are often a kind of madness and it is almost as isolating: the key is to know which ones are too crazy and which ones can happen.

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