The 8 Dumbest Money Mistakes Entrepreneurs Make

Mike Michalowicz Author of The Toilet Paper Entrepreneur, 

August 1, 2011

I get it. You have a lot on your plate. There is no doubt about that. There are things coming at you from all angles, and you have to be ready to take it all on, or at least know who to hire to stand out in front. Money issues are absolutely the biggest pitfall that entrepreneurs face. If you don’t keep it flowing, or can’t keep enough of it, your business will suffer.

They say, knowledge is power. Here are eight of the most common money mistakes that entrepreneurs make—and now that you know them, you have the power to avoid them:

1. Overhead investments

Many entrepreneurs invest in things like renting an office and expensive equipment a lot sooner than they should. These are usually expensive areas and can wreak havoc on your business. Don’t invest in these things until you really need to.

2. Underestimating miscellaneous expenses

Every business has miscellaneous expenses. Those are the ones that come up that never made it into your business plan and were never imagined. But they will come up, so assume your miscellaneous expenses are going to be a lot bigger than you first thought.

3. Not testing before investing

Eager entrepreneurs will invest loads of money to perfect their product. But they do this before they have even tested it out to see if there is a market for it. So before it is perfect and has all the bells and whistles, do a test run on it and see what the feedback is.

4. Purchasing extravagance

Do you really need that expensive office furniture package? Probably not, even if there are prospects coming to see it. Spending money on things that you don’t need yet is a big waste of money (and showing-off doesn’t seem to pay-off that often either). That doesn’t mean you can’t have that cushy office set-up, it just means it should wait until the business can afford it.

5. Tax avoidance

Entrepreneurs are often apprehensive to speak with an accountant, for whatever reason. Truth be told, you must get with an accountant, as it will save you money in the long run. An accountant can do everything from helping you avoid tax penalties to setting you up a salary or making sure you are on track with making your quarterly tax payments. The accountant is your friend, I promise.

6. Spending on do-it-yourself projects

Sure, as an entrepreneur you want to be able to hire contractors and outsource work. But you may not be in a position yet to do so. There are some simple tasks that you should do yourself, rather than hire an outside source to do for you. This will save money until you really can afford to outsource the task.

7. Hiring before being ready

Many entrepreneurs long for the day when they can hire their first employee. While this may be a great feeling, it should be avoided until the time comes that you actually need to hire someone. If you are not ready to bring on someone to do work, then you will be taking on a big expense with little return.

8. Not spreading the word

While it may not be money you take out of your pocket, it could amount to money you keep from entering it. You need to be your biggest PR agent, spreading the passion and information about your business whenever possible. Throughout networking, talking to others, etc., you need to always focus on getting the word out about your product or service.

Here’s the deal—money issues make or break entrepreneurs. So you have to take every opportunity to be smart with the money you spend.

Work Life Balance: How to Be an Entrepreneur and Stay Sane

By Nellie Akalp

Maintaining a healthy work-life balance is difficult for anyone, particularly when our smartphones buzz with each new email, no matter whether we’re on the way to the gym, in the grocery store, or relaxing at home. But the challenge can be exponentially harder for today’s entrepreneur. Starting a business requires a little insanity, to be sure, but you don’t want the lifestyle to send you over the edge.

So how do successful entrepreneurs stay sane while they prosper at work and at home? For me, finding balance boils down to taking it one day at a time, one step at a time, and always staying present in the moment while running and growing my business. Here are a few tips I like to incorporate into my daily routine:

1. Get a grip on time management.

I’m not talking about downloading the latest calendar or organization app. For most entrepreneurs, effective time management isn’t an issue with organization, but with prioritization. If you want work-life balance, you’ll need to think about everything that competes for your time, then decide what to keep and what to discard. You’ll also need to communicate clear expectations for yourself and others. In some cases, this means saying “No.” For some, saying no doesn’t come naturally, but you’ll be happier and healthier if you manage your time on your own terms.

2. Exercise, exercise, exercise.

No matter how hectic your schedule, make time for exercise. I work out every day by taking Richard Giorla’s Cardio Barre® classes. A good workout helps you release stress, maintain a routine, and think without interruption (exercise can be a form of meditation). Physical activity helps your body pump out more of those feel-good neurotransmitters, known as endorphins, to keep your mood up even in when days get a little tough (check out what The Mayo Clinic has to say on the subject). EvenPresident Obama faithfully hits the gym, The Economist has reported, relying on exercise as his life intensifies.

3. Unplug.

Facebook and YouTube aren’t the only digital distractions we face. For most entrepreneurs, the never-ending onslaught of emails and IMs from clients, vendors and colleagues ends up being the day’s biggest time sink. If you’re drowning in your inbox, dedicate chunks of the day when you unplug from the phone and email to get work done. Then log back on and power through the necessary responses.

And when “office hours” are over, close your laptop and put aside your mobile phone…even if just for an hour or two. For most entrepreneurs, this task will take enormous discipline, but you’ll be amazed at the difference it makes, in terms of both your mind-set and your productivity.

4. Live outside your job.

As an entrepreneur, you’re passionate about your business and you’re ready to put everything you have into making it thrive. You may feel you need to work on your business all the time (just for the first year…or for the first two years…), but eventually this lifestyle will catch up with you and result in burnout, damaged relationships, stress and health issues. Yes, there will always be more emails to send or more prospects to contact. But you’ve got to be able to walk away and spend time on the other activities you love, whether that’s reading, kayaking, movies, cooking, gardening or just spending time with family or friends. As much as possible, try to be 100 percent present during your free time activities, since bringing your BlackBerry on a hike isn’t much of an escape.

5. Don’t fear failure.

Sven-Goran Eriksson said, “The greatest barrier to success is the fear of failure.” And when it comes to running your business, truer words have never been spoken. As an entrepreneur, your path is uncharted and oftentimes bumpy. And when things don’t go as planned, it’s all too easy to find yourself frustrated, stressed or downright panicked. Realize that you cannot control everything, no matter how hard you try. This simple change in mind-set will actually give you better control over your environment and help you better respond to whatever comes your way. For me, I know that I am not done failing …I will fail again.  I am not done succeeding …I willsucceed again. And most importantly, I am not done trying!

6. Get help.

When you’re just starting out or times are tough, it’s natural to want to tighten the purse strings. And in many cases, this is the only realistic option. However, you should consider what you could gain by handing over certain tasks to contractors, employees, even interns or volunteers. By relinquishing control of administrative tasks or keeping up with the company’s daily blog, you’ll be able to better focus on what’s going to keep you in business. And that’s revenue.

The key to work-life balance is different for everyone; the key is knowing what works for you. How are you faring in the entrepreneurial balancing act? Have you found unique ways to stay sane and avoid burnout?

Speeding Up Materials Design

Model material: This organic semiconductor, one of the best ever made, was predicted by computer models, and then made in the lab.

Credit: Anatoliy Sokolov

COMPUTING

Speeding Up Materials Design

A new computer program accurately predicts the behaviour of proposed materials, which means faster development of new electronics and solar cells.

• BY KATHERINE BOURZAC

Audio »

A chemical compound designed with the aid of a Harvard-created computer program has turned out to be one of the best organic electronic materials to date. This new material, an organic semiconductor, could be used to make new electronics such as colourful displays that roll-up. It's an important proof of principle for using computers to aid materials design.

Organic semiconductors could enable less expensive, lightweight electronics that can take new forms, such as flexible displays and printed solar cells. It's hoped that the materials will also make solar power more widespread because it should be less expensive to make solar cells from them than from silicon and other inorganic materials. But in the decades since chemists began working with organic semiconductors, progress has been slow, and these materials have found limited applications, such as in short-lived portable solar cells. The main challenge is that these materials just don't conduct electrons and their positive counterparts, holes, nearly as fast as conventional semiconductors like silicon, making them much less efficient.

The new organic semiconductor, predicted using a computer modeling program  developed by Harvard chemistry professor Alán Aspuru-Guzik, and then synthesized by researchers at Stanford University, conducts charge much faster than the silicon material used in most of today's display electronics. That means it could be used to make brighter displays that provide crisper video. And the new material is sufficiently speedy to make electronics for organic light-emitting diode (OLED) displays used in cell phones and televisions or to control radio-frequency identification (RFID) tags used to track stuff.

For many years, scientists have talked about the potential of computational modeling to shorten the materials development process. When chemists develop new materials, "most work is based on intuition," says Zhenan Bao, the Stanford professor of chemical engineering whose group made and tested the new material. Unfortunately, intuition is hit or miss—a new molecule that seems promising may not do what researchers expect it to. By prescreening potential materials using Aspuru-Guzik's computer program, chemists can focus the months or years needed to synthesize and test new compounds on those that seem most promising.

Computational screening has been a great success in some areas, including energy storage. Gerbrand Ceder, a professor at MIT, has computationally predicted faster-charging battery materials that are currently being commercialized by the company A123 Systems. Until recently, computational methods hadn't been applied to making better organic semiconductors, which pose a different set of challenges, says Aspuru-Guzik. But now theoretical chemists have generated enough foundational knowledge, and experimentalists enough data, to make successful predictive models.

Aspuru-Guzik took as a starting point an organic semiconductor called DTT, which has already demonstrated promise in the lab. First, the computer program generated several possible variations on this large carbon-based molecule by adding and subtracting components. The program then predicted how these variations would behave and screened for the most promising—those that seemed likeliest to conduct charges very fast. These predictions were informed by a huge amount of data on how similar molecules and molecular building blocks have performed in past experiments, and by theoretical physics and chemistry.

When Bao's group synthesized the molecule predicted to have the best properties, it behaved as expected. Transistors made from the material operate 10 times faster than transistors made from amorphous silicon, the material used in today's display electronics; the new material is the second-fastest organic semiconductor yet made. The work is described in the journal Nature Communications. While Bao and Aspuru-Guzik say the material could be used in industrial applications, the experiment has more significance as a proof of principle for their methods for using computers to develop new organic materials.

Aspuru-Guzik is using a similar computational approach for the Harvard Clean Energy Project, which aims to discover better solar material. For this endeavor, he has a lot of computational power at his fingertips: his calculations are being run on the almost two million computers of users signed on to the IBM World Community Grid. Aspuru-Guzik is taking advantage of this brute force to screen about 2.6 million molecules that haven't been made for their solar potential, using experimental data on approximately 200 previously made molecules. The program predicts what color of light a material will absorb, and how strongly, as well as other factors that make a good solar material. 

"There's no way you can try all of the possible materials experimentally," says Geoffrey Hutchison, a professor of chemistry at the University of Pittsburgh who's also working on computationally predicting characteristics of possible solar materials. "As time goes on, the experimentalists are starting to rely more on prediction." Results like Aspuru-Guzik's should make them more confident in doing so, he says.

Classic Hacks: the Apple I Computer, the iPhone, and the iPad 3G

What we found when we opened Apple devices.

ERICA NAONE

Apple CEO Steve Jobs kicked off the usual media frenzy yesterday, but not by announcing a new product. Instead, Jobs announced his resignation from the position of CEO. Though Jobs will continue to serve as chairman of the board for Apple, the move represents the end of an era. Jobs became known in particular for his ferocious commitment to design. Over the years at Technology Review, we're featured a number of hacks inside key Apple products. What we always found when we opened Apple devices up is that the minimalist, ordered look the company favors goes far more than skin deep. The inside of an iPad, for example, is every bit as exacting and perfectly ordered as its exterior—and hard to coax into unintended uses. The following shows three classic hacks:

The Apple I (See Interactive)

The iPhone (See Interactive) 

The iPad 3G (See Interactive)