You could call Charles Freeman "the Mistake Man," not because he's incompetent, but because it's his job to see that his New York City lending company, Commercial Capital Corp. (CCC), doesn't loan money to a business doomed to make lots of mistakes. Over the past five years, CCC, one of the most active SBA lenders in the United States, has shelled out $300 million in loans to entrepreneurs-which is why Freeman has a list of the most common start-up mistakes:
Asking to borrow too little money. "A lot of companies find themselves strapped in year two," says Freeman. "You need to ask for enough money so that you at least have a 20 to 30 percent cushion to help get you through those lean times."
Having a business plan that falls short. "If you don't have the answers for how you're going to accomplish your goals, nobody else will," Freeman explains.
Either not having enough experience in the field you're starting a business in, or not hiring somebody with enough experience to help you. Either way, says Freeman, experience "is not something you can skimp on."
Failing to keep up with technology. Need we say more?
Having bad personal credit. This is a biggie. "It's a business risk for us to take," Freeman reasons. "It demonstrates a lack of responsibility and ability to pay off debts and to keep their affairs under control. A credit card is an extension of their persona."
Commercial Capital Corp., 25 West 43rd. St., New York, NY 10036, (212) 719-0002
Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.