This Issue: Avoid the Six Mistakes that Sink Most Start-Ups

Recently on The Apprentice, I had to ask a member of the winning team Kinetic to volunteer to go to the losing team, Arrow.

I was mildly surprised when I saw how many people were willing to risk making the move. Instead of staying on the safe winning team, they offered to move to the other team which was, pretty much, a wreck.

I think it showed how many people were good leaders and wanted to show off their abilities. As long as they were on the winning team they couldn’t take a leadership role. On the losing team, there was more of a chance to shine and they were very aware of that.

That’s obviously the way it is in real life too. When you’re working for a well-oiled successful machine, things are often easier but it’s much harder to stand out. If everyone at your company does a great job, it’s harder to get noticed.

But when you walk into a situation where things are mess, it’s easier to rise to the top and prove your talent. If you can manage to turn things around, even a little bit, you become a hero and a star.

For more insights on becoming a success in the world, investigate The Entrepreneurship Mastery Program from Trump University.

A Trump University student told me that ten years ago, she started a business that failed after four years. Now she is with us, acquiring the knowledge she needs to be a successful entrepreneur the second time around.

Just a few hours into the course, she learned an important lesson. “Even though my business lasted four years,” she says, “I made mistakes that killed it before I even opened my doors.”

The right kind of planning during the earliest stages can make or break a business. This morning I’d like to lay bare some of the mistakes that kill new businesses fast.

• Mistake #1: Failing to secure the funding that lets you start your business the right way. It is scary to borrow money. And equally scary to throw your lot in with venture capitalists who will be all over you at the first sign of trouble. But the fact remains, starting an undercapitalized business is a recipe for failure. You have to know what you are doing, which takes us to Mistake #2 . . .
• Mistake #2: Letting your business plan be an afterthought. Remember, a business plan is much more than a document that you file with a loan application. It is a tool you use to help develop your business idea. It lets you analyze and understand how much start-up capital you need. It helps you estimate cash flow and develop a realistic plan for your first years in business. (By the way, Trump University’s Entrepreneurship Mastery Program offers one of the best business plan “boot camps” available anywhere.)
• Mistake #3: Letting your marketing be an afterthought. Too many entrepreneurs get so embroiled in developing a product or designing a store that they don’t talk to their customers. Fortunately, Donald Sexton PhD, head of Trump University’s marketing programs, won’t let us forget that the customer must be any company’s main consideration from day one.
• Mistake #4: Pairing with the wrong partner. Some entrepreneurs who are short of cash take on partners with “deep pockets.” That is often a recipe for disaster. Others partner with friends who don’t bring much to the table as potential business partners. Unless you and a partner possess complementary assets that will make the business run better, you will be better off on your own.
• Mistake #5: Overspending before cash flow and profit kick in. Avoid the trap of spending money early for things you will only need later on. Don’t buy an expensive computer network if you can get started with a few desktop PCs. Don’t hire a receptionist if you can start out with a voicemail system. Consider an office share or a virtual office as an option to minimize expenses. 
• Mistake #6: Failing to consider the option of buying a business instead of starting one. When you buy an existing business, you can look at its books to see how well it is doing. You start out with customers, employees and expensive equipment already in place. Check out Trump University’s groundbreaking course, The Art of Buying a Business to learn more.
• Mistake #7: Going too cheap on your Internet presence. These days, an inexpensive Website can look as good as an expensive one. A shabby Internet presence can kill your image fast. 
• Mistake #8: Glossing over your areas of ignorance. We all have them. Some of us have big ideas, but are poor at planning. Some of us are great with people, but cannot crunch numbers. Trump University was created to address problems just like those, by helping people target their weak areas quickly and efficiently.

Trump University’s Entrepreneurship Mastery Program is the ideal place to learn the skills you need to get it right the first time. Check it out, because the time to get involved is today.

A power strategy from the pages of George H. Ross’s book, Trump Strategies for Real Estate

George Ross, Senior Counsel for The Trump Organization, is a formidable negotiator and businessman. In his book Trump Strategies for Real Estate, he sets out this simple strategy that can actually make banks eager to lend you money, whether you are buying a building or funding a business.

Entrepreneurs and real estate investors usually don’t apply for loans until they are already involved in a deal of some kind. Since they need funding fast, they walk into a bank, meet with a loan officer they have never seen before, and things don’t work out so well.

There is a better way. Let me explain a simple method of establishing credit that you can use to great advantage. The technique takes a little time, but I have seen it work beautifully.

Go to a bank and ask to borrow $10,000. When the loan officer asks why you need money, simply say that you want to have it on hand so that you can act quickly when an opportunity presents itself.

Have a financial statement prepared, because the loan officer will ask for it. On it, to the extent that you can, list some assets that can be reduced to cash, such as stocks, bonds, or the surrender value of insurance policies. Offer these assets as security for the loan, even though their value will far exceed the amount you are asking for. This should convince the lender to write the loan - happily. 

Your strategy is to borrow that $10,000, pay it back, then borrow $25,000 and pay that back, and then possibly borrow $50,000 and pay that back ... and so on, as your situation, needs and finances dictate. Your goal is to establish a perfect payment record.

At the outset, this strategy will cost you money, because you are paying interest. But remember that if you put the money you borrow in an account where it will earn interest, you will only be paying the difference between the interest on the loan and the interest you are earning on the money.

If you keep increasing the loan amounts, make all payments on time (and if your financial statement remains sound for as long as you implement the strategy) your bank will then be willing to write you a sizable loan at the time when you really need it.

This plan might require banks to violate their normal lending policies. But banks violate those policies all the time for their good customers, meaning customers with whom they have established solid relationships. Through the process I outline for you here, the bank will have come to trust your judgment and credit trustworthiness, based on your track record. The result? You can get a loan, and often quite a large one, without having to go through the typical inquisition that most first-time loan applicants face.

Banks bend over backwards not to lose good borrowers who have established a proven track record.

And another strategy . . .

Don’t hesitate to ask your bank for more favorable terms on your loan while you are paying it back, based on your excellent repayment record. If you get turned down, ask to speak to your loan officer’s boss. If that doesn’t work, say that you are considering taking your account to another bank that is more flexible.

Responsible borrowers are golden assets to any lending institution. The strategy I lay out for you this morning, simple as it is, will help you join their select company.

Lessons from Anson Hall, entrepreneur

When Anson Hall sold his successful GM dealership in Massachusetts and tried to retire, it didn’t work. After building his business from the ground up and adding Pontiac and Cadillac to his original Buick line in the process, relaxation just didn’t agree with him. Anson had already stretched the limits with GM by starting a company-within-a-company that offered one of the first extended-care warranty programs anywhere. With that kind of experience under his belt, he decided that it was time to start the kind of business where he could call the shots.

“Rest is rust,” he says. And who would want to rust?

So Anson became an entrepreneur. He invented, and is selling, a new product that he calls a Manners-Mender®. It’s a small vacuum-molded plastic utensil rest that he sells to casual restaurants. When diners unwrap their knife, fork and spoon, they can tee them up neatly in the slots of a Manners-Mender® device instead of placing them on the unhygienic tabletop or attempting to balance them on the edge of their plate.

Anson’s product is derived from the elegant knife rests that were popular in the dining rooms of wealthy people more than a century ago. It is also related to the chopstick rests that are used in Asia. However, his patented design incorporates some pretty modern marketing features. A business card snaps into the underside, allowing a restaurant to display and distribute its own marketing message, or a promotional card from another business. The devices are manufactured in black, silver or clear. The clear model packs a particularly effective marketing punch, since the message on the inserted card can be seen at all times by the diner.

Anson made prototypes, hired an attorney and obtained a series of patents on his device. He built a Website, designed ads, selected a manufacturing company for his product and is recruiting a sales staff. Last year, he bolstered some areas of his knowledge using two Trump University courses: The Entrepreneur’s Success Codes and Branding for Profit.

Anson’s product has attracted positive attention at trade shows. He has also met with venture capitalists in some pretty interesting settings. Last winter, when New Hampshire hosted a one-day skiing event to introduce entrepreneurs to venture capitalists, Anson took part.

Entrepreneurs were paired with investors at the bottom of the hill. They rode to the top of the slope together while the entrepreneur made a pitch to the potential investor. Then they skied to the bottom of the hill and were paired with new lift partners. Since Anson didn’t want to miss out on that opportunity, he had his skis tuned up and hit the slopes.

Now, you might be wondering why the Trump Blog is devoting this much space to the story of just one entrepreneur this morning. After all, Anson Hall has done what many other entrepreneurs have done. He conceived and patented a product, designed ads, built a Website. He met with investors. He rolled up his sleeves and made sales calls to get orders started. And this month, Anson’s device is making its debut in one New England eatery, with others to follow.

What makes Anson Hall a little different from some other entrepreneurs is the fact that in April, he will be 87 years old. He’s hustling. He refuses to stop. And if Anson is doing all that without making any excuses, that leads to the question I really wanted to ask you today.

What the heck is stopping you?

To get started on your own path to entrepreneurial success, enroll in The Entrepreneurship Mastery Program at Trump University. Classes are now forming.