New business owners may often feel overwhelmed with the sheer amount of rules and laws they must acclimate to. David Muchow is a corporate lawyer and serial entrepreneur with a long history of starting successful companies. On this episode of The Small Business Show, he sits down with host Jim Fitzpatrick to discuss his recent book “The 7 Secret Keys To Startup Success” and other advice for young professionals starting a new company.
Muchow notes that many businesses fail early due to the owner’s lack of familiarity with proper management. Without the right knowledge, entrepreneurs can easily destroy the company they tried so hard to build. “You have to know what the business killing mistakes are so that you don’t make them,” remarks Muchow.
One such mistake is starting a business with friends but without a proper plan or structure in place. While friendships may work well outside of work, “familiarity breeds contempt,” as the saying goes. This can lead to disrespect, overstepping boundaries and create a hostile work environment. It can even lead to a situation where the CEO has to fire their friend. It is exceedingly difficult to navigate personal relationships without rules in place to dictate how communication occurs, what standards all employees must follow and what actions to take in certain scenarios. Thus, when first time business owners start their companies in partnership with individuals in their social circle, Muchow recommends that all members write and agree to a set of guidelines.
Muchow notes that many first time business owners also make the mistake of mixing personal relationships with business relationships. While some friend groups can make it work, setting boundaries with professional acquaintances is essential to avoid awkward or even damaging scenarios. Dating employees as a CEO is one such example, since the uneven power dynamic can create problems for everyone involved.
Another mistake one can make is failing to protect their intellectual property. While most may view intellectual property as a protected work, this phrase refers to more than just copyrighted materials. It also refers to the elements which make one’s product unique. Hopeful entrepreneurs, excited with their new business plan, often fail to keep it a secret, causing the idea to be stolen. Muchow explains that this can also happen when professionals develop a new product, and start bragging about it online. When these individuals go to obtain a patent, however, they find that their proposal gets rejected. Since protection can only be given to brand new inventions, the entrepreneur ruined their chances by introducing it to the public too early.