Danny Wong: 5 Ways to Lose Money Quick

As a young entrepreneur, it is very easy to make small mistakes that can cost you a lot of money. Sure, everyone says that this is a sure-fire way to increase users or customers, but will it really work for your business? There’s no golden rule to making money easily or increasing the amount of users for your application, but there are simple ways you can mishandle your capital.

 

5 Ways to Lose Money Quick     

1.       Hiring people because their resume looks good.

Be very picky when hiring good candidates. Make sure they’re good! Do not go with the first one that catches your eye. Get outside opinions too. Don’t waste your time and/or equity on someone who looks good on paper, sweet talks you, but can’t deliver. Perhaps you can try a ‘test-run’ with the candidate to see how well they deliver. That’s an inexpensive way to bring help on-board without securing a commitment from either party.

 

2.       Failing to measure the results of a paid marketing campaign.

You must know whether or not your campaigns are producing results, and then cut the stuff that’s not working and double-down on the things that are.

 

3.       Allocating a one-time only budget for an outsourced project.

First off, you will NEVER get the specs for the project right the first time around. You may think you’ve thought of EVERYTHING to tell your outsourced team to do, but as the project develops, you realize this, this and that needs to change or you need to add XYZ. These changes and additions will cost you more money, so understand that your original estimated quote for a project is highly subject to change.

  • Also, once the project is done and you start getting feedback from users you may want more stuff re-done or added. Again, this will cost you more money, so be prepared to take the hit. Do not just assume that the finished project is all you will need for success.

 

4.       Spending too much money and time on formal research.

Primary and secondary research through surveys, studies, etc. are all good, but in reality, your best research will come from data you’ve collected on how users use your product or service, what works, what doesn’t work, and what else you need to do to be better.

 

5.       Paying for things when you don’t have to.

There are lots of free resources in the World Wide Web. All you have to do is Google it. And if it’s not entirely free, you’re likely to find a “free-trial” or freemium versions that’ll allow you to use a program for free until you’re big enough to pay for it.

 

There’s no reason you should be making these sloppy mistakes if you’re just starting off as an entrepreneur. It’s very likely you’re playing with your own money too, and you definitely don’t want to lose money either of these silly ways. Make smarter investments, know that your money has a tangible ROI, and make sure you even need to spend money.

 

Anyone else have advice for how to prevent your capital from foolishly disappearing?

 

Danny Wong is Lead Online Marketer for Blank Label, a provider of men's dress shirts online.

 

Photo Credit: Purpleslog on Flickr

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Discussion

Free Interns Not ALL THAT!

 6: Don't work with Danny Wong. Danny get back to work. (Man, it's hard to be sarcastic in text)

 

In this effort to bootstrap and not burn capital, I just want to make a note that 'free' interns are not everything they're cracked up to be. We currently do have two interns, Dani and James, and they're great. They help us a lot, they're learning useful things, and they believe in the vision. But we've worked with A LOT of 'free' interns, and even though we didn't pay them with cash, they sure weren't free.

 

When I first found out about this American phenomenon of free interns, I was shocked, and rushed into thinking it was the best thing since free internet at cafes. But similar to free internet at cafes, you may have some difficultly 'logging in' and it generally isn't 'as quick' as you'd like. It's very possible that we just didn't know how to pick them, but from speaking to other young founders who get a kick out of 'having a big team', pick very carefully and just try to do more yourself. 

Re: Free Interns Not ALL THAT!

Fan,

 

Great point. Even an intern is a hire for your business and that means they require your time and investment to utilize.   Anyone who joins a business either net contributes or drains resources. With any intern, you need to make sure you have someone who is a net gain.  Even a free hire needs to be vetted strongly.

 

Thanks,
Jason

Jason Evanish
CEO / Co-Founder
Greenhorn Connect
Twitter: @Evanish

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