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10 Common Mistakes that Will Ruin a Good Business

10 common mistakes that will ruin a good business:

What follows is a full disclosure of who I really am, beginning many years ago, when I had my own broker-dealer in Albuquerque NM in 1985, without knowing that I needed the permission of the local Patron to do so:

40 years of business experience 541-982-9291 Israeli Rothman

This article was written in 2006:

Death of great potential: the Coracle story, told by the founder:

Ladies and Gentleman, it is with great sorrow, and the urgency to avoid having what happened to me, happen again, to you, that I share with you this compelling story of the huge potential of a start-up venture which almost achieved greatness in the last five years, and is now a complete loss: The story of Coracle Incorporated, formerly known as Oregonfreeads.com, and Ads for Free, Inc.

Oregonfreeads.com was formed as an Oregon corporation in 2001 in Springfield Oregon. My name is Israel Rothman, and I started the company to pursue an idea that my employer could not understand: a way to automate my job.

I had been in fleet and Internet sales for a local auto dealership for years, and had become proficient in achieving search engine placement for my employer.

As the Internet became more and more competitive, my job became harder and harder to do, requiring me to build mirror sites linked together and employ all sorts of tricks to achieve first page organic placement: my idea was to automate this process by giving away free ads and auctions; using the user input to do my work for me, and build link-popularity and submission activity which would cause the marketplace to move through the website: oregonfreeads.com. I had some rudimentary scripts written, and began selling sponsorships of categories to local businesses.

Within a year, we had over 50 companies stuck to the top of the search engines for their chosen words, and we realized that we could actually guarantee results for chosen key word searches. We decided to offer a money-back guarantee; we bought adsforfree.com for $800, and we went nationwide by way of a strategic alliance formed with Real Estate Magazine (RISMedia.com) which put us ‘on the map’ as a provider for the Real Estate Industry, which, at the time, was the only market really ready to understand such a product.

Believe it or not, people in those days would scoff at the idea that was even legal to do this, which now, as you know, is a multi-billion dollar industry just a few years later: where SEO (Search Engine Optimization) has blended with and become mainstream advertising.

It was a wonderful, fun company that everyone loved; we grew to over one million in sales by the fourth year, with over 500 customers all over the US that we kept on top of the search engines’ organic results.

Unfortunately, capitalized on only 110,000 in private placement money from the sale of company stock, we were grossly undercapitalized for such volume; and changes in the market required changes in our programming we needed to capitalize.

I found a group of real estate investors in the San Francisco area who offered to back us. It seemed like a good fit; they had deep pockets, and understood, we thought, what we had.

The unfortunate events of the last year are the result of that investment.

I certainly am not without blame; I was very tired after working very hard to get through the start up; the company had grown beyond my ability to manage it: there was infighting, and other impending problems; so it was mutually agreed by all that there would be a change and the new investors would participate in management. What happened next, although very common, was an absolute disaster, resulting in huge loss and business failure: please be mindful to avoid these mistakes: as it could happen to you, in your business, and it will, if you let it:

The beginning of the end:

Mistake number one: stop listening to the guy who knows the market and the product:

Immediately when the investors gained complete control they removed me from all activities; they stopped listening to me about what needed to be done on the back end (programming) and the sales effort, assuming that the programmer (whom I had given stock to during the start up) knew best about the programming, and that they (although they barely knew what SEO was) knew better how to market a company this size.

Mistake number two: change everything at the same time:

They changed the name of the company, changed the way of selling it, watered down the product description; all at the same time: they were so sure of themselves with all their money and ‘expertise’: they saw no need to be scientific about it.

Mistake number three: over-spending:

Indeed the company had huge potential, and they intended to invest a lot; but to move the company to Newport Beach, and add on over $30,000 per month in non-income producing executive salaries was a mistake so early in the process.

Mistake number four: listen to the Tech department over sales:

They were so sure that the multiple experiments they were conducting at the same time would work, they figured they did not need to worry about sales, and spent huge amounts of money on technology which, while it is very cool, did nothing to drive sales, and used up valuable capital.

Mistake number five: hire the wrong people:

They brought in a marketing director who was insulated from me (they were afraid I would tell him things they thought un-important) unfortunately, although the guy was qualified, he knew nothing about our fast moving, constantly changing marketplace: and the learning curve was extremely expensive.

Mistake number six: do not promote from within:

Massive housecleaning and turnover is common in these cases: but they actually brought in people who were not qualified, and installed them on salaries above people who were the backbone of the company: a top-down management style which caused a lot of in-fighting and jockeying for position; and all kinds of deceit from people trying to cover their own asses rather than do the right things.

Mistake number seven; when things are not working, ignore it and keep going:

Although they never hit any of their projections, and although all this had been predicted by yours truly in the only board meeting he was ever allowed to attend, they just ignored these discrepancies and stuck to the experimental plan: isolating me more when I protested.

Mistake number eight; when the business plan isn’t working; spend more!

Although we kept running out of money due to all these mistakes, they would not change course, and just kept loaning the company more and more, going deeper and deeper into debt: the almost debt free corporation one year ago, is now in debt over $600,000.

Mistake number nine; when things are bad, rip off the salespeople:

No longer able to explain the missed projections, unable to raise more money, the started changing the sales compensation plan trying to increase the margins: everybody knows what happens when you do that.

Mistake number ten; tell everybody that everything is ok, and keep going farther beyond the point of not return.

When they could not pay the employees, the made excuses, and kept digging.

If there is a moral to this familiar story of all the classic mistakes being made at the same time, it is this:

Stuff changes; in life, in business, in the marketplace: when things aren’t working, consider changing course; and when they are, be reverent and careful about changing anything, and do it carefully, slowly, scientifically.

I am a lifelong entrepreneur, and this goes with the territory; I am happy to be alive, living in America, and to have another chance ‘at bat’.

But I have lost everything again, and five years of hard work, and it could have been avoided; and it could happen to you, faster and easier than you ever imagined.

Israel Rothman, Starting over!

I have more business experience than anybody you know.

Israeli Rothman 541-982-9291 Semi-retired and available.

Original article is here:

10 Common Mistakes that Will Ruin a Good Business