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Start-up lessons learned the hard way

Business owners offer prospective entrepreneurs advice on how to avoid the painful mistakes they made.

August 22, 2010|By Sharon Bernstein, Los Angeles Times

With corporate jobs in short supply, out-of-work Americans are going into business for themselves like never before.

But starting a business can be a perilous journey that most of us — even those who seem to be born entrepreneurs — can have difficulty navigating.

No matter how much planning people do, pitfalls lurk.

It's here that the real entrepreneurs show their spirit, experts say — by learning from their mistakes and moving forward. Some retool their companies, others shut down a failed business, only to open another.

New entrepreneurs make many of the same mistakes, said Ethan Mollick, a professor who specializes in entrepreneurship at the University of Pennsylvania's Wharton School. They fail to fully develop a business plan. They neglect important market research. They get into trouble by making poor hiring choices.

It's hard to anticipate everything that could go wrong, Mollick said. "Your big problem is probably going to be something that you don't expect."

Those who succeed keep trying — studying their mistakes and moving on.

"When you solve one problem you go on to the next," said Penny Pickett, the Small Business Administration's top entrepreneurship expert.

Here are some tales from now-wiser businessmen and -women who say they have learned from their mistakes and are happy to recall "where I went wrong."

Baby Planners

Ellie Miller and Melissa Gould started their Los Angeles company — Ellie & Melissa, The Baby Planners — at the height of the economic boom.

They had a great slogan and a notion that they would help expectant moms plan for parenthood, giving advice on what to buy, whether to engage a midwife, even how to choose a hospital.

Miller, a former television journalist, and Gould, a screenwriter, were confident they could handle the marketing side of the business. But they spent less time on the details of their service.

Their press release, proclaiming "We take the labor out of your delivery," caught the attention of television host Rachael Ray. The pair appeared on Ray's show, and calls started pouring in.

But they had reached the wrong people.

Instead of hearing from expectant moms, they were flooded with inquiries from folks who wanted training to start similar businesses. Hardly anybody called from Southern California because the "Rachael Ray" episode had been preempted locally for coverage of a wildfire.

"We heard from thousands of people who wanted to be baby planners," Miller said. "We had no plan to react to that." Then, the economy tanked and their service became too expensive for many families.

Three years later the partners say they have retooled. They're still offering consulting services to expectant parents. But they're also advising makers of baby products on what moms want, and producing videos on baby gear for a Walt Disney Co. website.

"It's been a roller coaster," Gould said.

Get it in writing

Gary Nicholson had little need for formality when he started his Internet marketing company, Relevant Trafik, in his bedroom in Culver City.

But last year he decided to expand. He had to hire people, get a business license and register as an employer with the Internal Revenue Service. He had to move out of the bedroom.

All the while he was creating websites for clients and crafting Internet marketing campaigns. There was so much to do that he gave little thought to the smaller details of the contracts he was signing with his customers. He knew enough to get a contract. But he didn't think to spell out every detail.

That's where things went wrong. A customer ordered a website, thinking that certain expensive graphics were included. They weren't, and a dispute arose over whether the client should have to pay extra for them. Nicholson wound up forgoing half of his company's fee.

"Now I go over it with them and make sure they understand it," he said.

Fishing expedition

Alex Andon was dying to get out of his job. All day long, the newly graduated biology major processed medical samples in a Bay Area laboratory. The work was boring and there was little social interaction.

After noticing the popularity of jellyfish displays in public aquariums, he had an idea. He would design desktop aquariums for jellyfish and sell them online.

The tanks had to be a certain shape so the jellies wouldn't get stuck in the corners, and the filter had to be specially designed so the delicate creatures wouldn't be sucked into the tubing.

All that done, Andon started selling. But he hadn't realized that customers would also need jellyfish — and he had no supplier.

"I didn't know where to get them," said Andon, whose company is called Jellyfish Art. "I would go out in a rubber boat and collect these things off the beaches here in San Francisco." Not only was it a pain to collect them, but the cold-water creatures also require refrigeration, complicating his task.

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