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Part Three: John Osher's Startup Mistakes in Management

Anonymous on March 10, 2010 Source: e360 Blog

This is the third part in a four part series.  Gary Schoeniger discusses his interview with one of America’s most successful entrepreneurs John Osher and the mistakes that startups make.  Below is Part Three: Mistakes in Management. Part One discussed the mistakes in Market Research and Strategy. Part Two discussed the mistakes in Financial Planning.

In a recent interview, I asked John to share his list of 17 startup mistakes with us. He graciously agreed. Below are the mistakes regarding Management:

Hiring too many people and spending too much on offices and facilities

"Now you have lower sales, higher costs and too much overhead. These are the things that you see every day in companies that fail. And they all grow out of that first mistake: failing to research the size and viability of the opportunity."


Bringing in unnecessary partners

 "There are certain partners you need. For instance, you often need money, so you're going to need money partners. But too many times, the guy with the idea takes on all his friends as partners. Many people don't provide strategic advantages and don't warrant ownership. But they're all going to get 25 percent of the company. It's totally unnecessary, and it's a mistake. Before people are made partners, they have to earn it."

Hiring for convenience rather than skill requirements

"In my first business or two, I hired relatives. It was easy to do, but in many cases, they were the wrong people for the job. And it's hard to fire people, especially if they're relatives or friends. More time needs to be spent handpicking people based on skill requirements. You really need super-skilled people who can wear more than one hat. It just bogs you down when you hire people who can't do the job."

Neglecting to manage the entire company as a whole

"You see this happen all the time. They'll spend half their time doing something that represents 5 percent of their business. You have to have a view of your whole company. But too often, the person running it loses that view. They get involved in a part, and they don't manage the whole. Whether I do this product or that product, whether I hire somebody, I consider how they will fit long term and short term in the big picture. Constantly try to see your big picture."

Part Four of the John Osher’s Startup Mistakes will be posted Wednesday March 17th and focus on Startup Mistakes in the Overall Startup Vision.

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