6 Pitfalls That Can Crush Your Business

In the military, they often say, “no plan survives first contact with the enemy”.  I think that is also applicable in business, where that saying should be amended to “no business plan survives first contact with reality”. Recently Jesse Kramer former owner of Brooklyn Taco, wrote an article about the six pitfalls that helped to crush his business.  Kramer’s case clearly illustrates why we need to be willing to deviate from our business plan in order to adapt to circumstances “on the ground”.

Here are Kramer’s six pitfalls:

1.    Unwillingness To Share Ownership.
According to Kramer, he “had too much pride to share ownership of Brooklyn Taco with an outside investor” even though he was being offered $400,000 for an 80 percent stake.  Of course, giving up equity comes with its own risks, but take the time to analyze the pros and cons of taking on a partner that has “deep pockets”; don’t simply assume that it’s best to keep your company entirely in your own hands without careful thought.  This is especially true if, like Brooklyn Taco, your business suffers from cash flow problems.


2.    Starting Too Small
Most cautious entrepreneurs understand that it is best to minimize start-up costs and operating expenses when starting a new venture.  Clearly, dreams of expansion can be realized only after you start accumulation customers and earning revenue.  So Kramer’s “plan… to slowly grow and use the earnings to fund a larger operation” makes perfect sense.  However, he discovered that there needs to be flexibility in how we apply these basic rules.  It turned out that his small space with the low rent “lacked sufficient cooking capacity and seating to generate enough profits for expansion”.  Essentially, this approach did not allow him to maximize his business’ full potential.  Are you in a similar bind? If so, don’t wait until it’s too late before making changes.

3.    Failure to Analyze The Pros and Cons of His Business’ Location.
Kramer found out why it is important for you to carefully analyze the positives and the negatives when choosing your business location. Though Kramer found that New York City has many positives (“a high volume of people, access to big press outlets, tourist traffic, millions of food-centric locals and plenty of vacant real estate available to open new locations”), he failed to realize that the rents were too “volatile”.  So, even though his business had a consistent flow of revenue, Brooklyn Taco still had cash flow problems that made it difficult for him to attract and pay his employees.  This is a lesson that you should not only consider the location you love, but also other (possibly more viable) alternatives.


4.    Failure To Utilize All Possible Revenue Streams
Kramer was passionate about his main line of business – making really great food. However, he found out too late that, as a small business (especially one in an expensive city like New York), he should have explored other synergistic sources of income.  Clearly, as a restaurateur, alcohol not only goes great with food, it is also shelf stable and has a high profit margins.  As such, it would have greatly boosted his bottom line.  Unfortunately Brooklyn Taco did not even have a license to serve alcohol.  Are you fully capitalizing on the different streams of revenue that are available to your business?


5.    Pick A Business That Can Survive Without You
This is something I hear from my dad constantly.  I think it’s probably his first rule of business ownership.  Clearly, when you are just starting out, this is usually not an option.  You and your business are essentially one.  However, if you want to have a viable enterprise that can survive unforeseen events, then you must slowly but surely, wean your business from relying on you for its existence. Kramer learned this lesson the hard way when his business could not survive his extended medical absence.

6.    Partnering With Your Significant Other.
This is something I think everyone needs to decide for themselves. I’ve seen people who thought it was the secret to their success and others, like Kramer, who think it is one of the causes for their business’ demise.  Regardless of where you stand on this issue, like any other partnership, you should definitely explore the exit strategy just in case one of the partners wants to move on.


Flexibility and adaptability are two essential skills of successful entrepreneurs.  Yes, business plans are necessary; however, you cannot strictly adhere to these things if the situation on the ground demands a different approach. Learn from Kramer’s mistakes in order to ensure the success of your own business.

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