Starting up is tough but some pitfalls can be avoided

Manar Al Hinai and some of her friends have started businesses with little or no experience. While it worked out for them, they made mistakes along the way. Here's how to avoid some of those rookie errors.
One of the most frequent errors of a retail entrepreneur is trying to keep the rent as low as possible. Jeffrey E Biteng / The National
One of the most frequent errors of a retail entrepreneur is trying to keep the rent as low as possible. Jeffrey E Biteng / The National

Some of my friends who started their small businesses had little or no experience, as was the case with me, and just jumped in. Luckily for us, it turned out just fine.

However, over the past couple of years, I have held countless business discussions with Emirati entrepreneurs about their experiences, and even though they are doing well now, many have made the same kinds of mistakes along the way.

With careful planning, some "rookie" mistakes can be avoided.

One of the most frequent errors of a retail entrepreneur is trying to keep the rent as low as possible, such as opting to open a store in a non-commercial area of Abu Dhabi.

The main target for businesses is to keep their expenses low, right? Not necessarily. Sometimes it is worth paying a higher rent if it increases the number of customers, enhances the business's reputation, or makes dealing with suppliers easier. In the world of start-up businesses, a small mistake regarding location can be fatal.

Hiring someone you trust and know is not always the best option, either.

When it comes to small businesses, competence should be the watchword. While hiring friends and family has its benefits in terms of trust, it limits the pool from which you can choose qualified managers or employees.

Friends and relatives can also carry baggage and may take you for granted, or slack off on the job. They can also be hard to manage and even harder to fire.

Another common mistake is with pricing. Keeping the price on products "reasonable" might sound nice, but it is not nice for your profit margins. Why not pick a price that will allow your business to flourish?

A friend of mine established a clothing line and decided to underprice her designs to attract business. Doing so, she did sell but only barely covered her costs. Now she wants to hire an employee to help her out, but she realises that she will not end up with much of a profit after the employee is paid. In her case, it may even mean a loss.

Buying second-hand equipment to minimise expenses is not always smart. It works in some cases, but in many others it is short-sighted.

For example, buying a delivery vehicle with more than 200,000 kilometres on the clock may cause you to waste time and money fixing the vehicle instead of catering to your customers. You want to generate business. Can you really afford equipment downtime?

Moreover, an overdose of love for your product could kill it. I am all about being passionate about your small business. That is what made mine successful, but it does have its downside.

Make sure that your passion does not lead you to make a bad decisionand that it does not blind you to the fact that even though you love your product, it may not necessarily have customer appeal.

Something else to watch - saving money on professional advice and instead listening to your friends is not always wise. Unless your friends are business consultants or experienced entrepreneurs, do not even go there. You may save money in the short run, but it could end up costing you more, perhaps even your business, down the road.

Moreover, do not just count on consultants' views, but join a business group, talk to successful entrepreneurs, buy some books about real-life stories of business success. Check out Tamakkan and ThinkUp, websites that are a platform for successful entrepreneurs and talent in the UAE and the region to share their success stories.

It may be difficult to decide which advice to take, but no one said entrepreneurship is a piece of cake.

Finally, avoiding borrowing does not always mean you are being prudent. Yes, in some cases, borrowing can be unwise. But if borrowing money is likely to guarantee your business's success, go for it. Borrowing is not always irresponsible or foolish.

Graduating from rookie status can take more than a year, so be patient. To make progress faster, try learning from others.

When you learn from your mistakes, that is when you are not a beginner any more.

Manar Al Hinai is an Emirati fashion designer and writer,who can be followed on Twitter: @manar_alhinai

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Published: May 27, 2012 04:00 AM


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