John Osher has business in his blood. During his 7 years as an undergraduate college student, Osher started and sold a vintage clothing store and an earring outlet. On his way to building ConServ, his first major business venture, he worked as a cab driver, plumber and a carpenter. Second venture Cap Toys, where sales volume reached $125 million, was sold to Hasbro in 1997.
When formulating the strategy for his third venture, which became Dr. John’s Products, Ltd., Osher wanted to start the perfect company and so decided to make a list of everything he had done wrong as he built the previous two. In 1999, he used this list when he started Dr. John’s SpinBrush, an electric toothbrush that retailed for $5.00. Maybe you had one? The SpinBrush became wildly popular and in 2001, Proctor & Gamble bought him out for $475 million. Enough said! Below are more pearls of wisdom from John Osher’s list of start-up screw-ups:
7. FAILING TO HAVE A CONTINGENCY PLAN TO ADDRESS A SHORTFALL IN SALES PROJECTIONS
“Even if you’ve been realistic about your ability to enter and penetrate your market, sales projections and start-up and operating expenses, there are things that happen when you start a new business. These aren’t a result of poor planning, but they happen. Bank rates could go up. There could be a strike. You need a Plan B to cover yourself should things not work out within the timing that you want.”
8. BRINGING IN THE WRONG OR UNNECESSARY PARTNERS
“There are certain partners you need. If you need money, you’ll need money partners. But too many times the guy with the idea takes on his friends as partners. Many people don’t provide strategic advantages. Before people are made partners, they have to earn it”.
9. HIRING EMPLOYEES FOR CONVENIENCE RATHER THAN SKILL
“In my first business or two, I hired relatives, but in many cases they were wrong for the job. It’s hard to fire relatives and friends. Spend time to handpick people based on skill requirements. It bogs you down when you hire people who can’ t do the job”.
10. NEGLECTING TO MANAGE THE ENTIRE COMPANY AS A WHOLE
“You see this happen all the time. They’ll spend 50% of their time on something that represents 5% of the business. Too often, the business owner doesn’t have a view of the whole company. They get involved in part, but don’t manage the whole. Whether I handle this aspect or another, whether I hire someone to do what I can’t, I consider how it all fits into the long-term and short-term big picture. Constantly try to see your big picture.
11. ACCEPTING THAT “IT’S NOT POSSIBLE” TOO EASILY, RATHER THAN FINDING ANOTHER SOLUTION
“I had an engineer who was very good, but with every product we developed, he would say ‘You can’t do it that way’. I had to be careful not to accept this too easily. I had to look further. If you’re going to be an entrepreneur, you’re going to break new ground. A good entrepreneur is going to find a way”.
12. FOCUSING ON SALES VOLUME OVER BOTTOM LINE PROFIT
“Too much of your management is often based on sales volume and market size. There’s too much emphasis on how fast and big you can grow the business, rather than on how much profit you can make”.
I’ll conclude with the final five elements next week. Thanks for reading,