Five Common Mistakes That Kill Small Businesses

You’re a managed service provider and you’re seeking to take your business from good to great. Here are five key mistakes you’ll need to avoid while building your start-up business.

1. Hiring Legacy Talent: You worked with John Doe 10 years ago and he was the best Novell NetWare guru you knew. Plus, he has a great, engaging personality. He’s a perfect cultural fit for your company. Only trouble is: John’s technical skills are stuck in the 1990s, and he doesn’t have a clue about Web 2.0 and managed services. Before you make a hire — especially a hire involving old friends — make sure they’ve kept their skills current.

2. Failing to Line Up Credit: My dad always said “establish a line of credit before you need it.” After all, when you’re really desperate for money, lenders are less apt to write you a check. So, go establish that line of credit during your strong business periods — when lenders are more inclined to take your call.

3. Surrounding Yourself With Infrastructure: You’re leasing lots of office space. You’re buying network infrastructure. But you and your business partners should be out on the road meeting with customers. Constantly. You still need a “place” to get your work done. But increasingly, well-designed home offices, Hotel conference rooms, trade shows and other locations are just fine to get your business going.

4. Failing to Have a Hierarchy: Flat organizations can be wonderful. Everyone can talk to everyone. But who reports to whom? And who holds everyone accountable for doing a good job? Clear job descriptions, performance reviews and an organization chart are must-haves even for small managed service providers.

5. Doing What You Know, Ignoring What You Don’t: This is somewhat related to point 1 (hiring legacy talent). As a matter of habit, we all tend to focus on business areas we already understand. That’s dangerous. Should you target a shrinking market you understand, or push ahead into a growing market where you still have a lot to learn?

Just when you’ve learned something new, you can’t afford to rest on your laurels. MSPs must continually push beyond traditional managed services (storage, security). I believe savvy MSPs will become the digital gatekeepers for small businesses, managing voice, video, telepresence and other services for customers.

What fatal mistakes have you seen small businesses make? Share them, and I’ll be sure to keep them in mind as we build our own business.

Update 7/9/08: I just stumbled upon these two related blog posts. Great reads:

• What Not to Do: 17 Most Common Startup Mistakes (Entrepreneur Mag)
• Startup Lessons Everyone Should Read (Instigator Blog)