7 Traps to Avoid When Starting Your Business

While economists continue to debate whether we're truly rising out of the recession or entering into a double-dip, one thing is clear: The employment sector is still in a slump. The strongest job growth seems to be in the small business sector, which has accounted for 65% (or 9.8 million) of the net new private sector jobs created in the US between 1993 and 2009, according to the Small Business Administration. The small business sector has actually seen a surge in activity: Research from the Kauffman Foundation indicates that the number of American businesses created in 2009 marked a 14-year high, surpassing the number of businesses created during the 1999 and 2000 high-tech boom.
If you're thinking about starting or joining a small business in this economy, here are seven traps to avoid:
1. Don't let the economy get you down. While many workers view precarious economic conditions as a time to hunker down in their jobs and try to weather the economic storm, others see it as a window of opportunity. Starting a business in a weak economic environment can have several clear benefits: The cost of doing business can decline because suppliers and partners may be more willing to negotiate on pricing and conditions, and the opportunity cost of lost income from a traditional job may be lower. Access to capital is also improving: The Small Business Administration's Office of Advocacy reports that in mid-2010 commercial banks started easing lending conditions while levels of venture capital investments increased.
Of course, there are also precautions to starting a business in a weak economy: Discretionary spending is down, so businesses selling goods or services that appeal to budget-minded customers may have an easier time gaining new customers in this economy than sellers of full-priced luxury items. Similarly, do-it-yourself services and low-cost substitutes may fare better than full-service or premium alternatives. For example, self-service storage and organizational retailer Organize.com saw a greater than 10% increase in year-over-year sales from 2007 to 2008 and again in 2009. Explains Terry Shearer, CEO of Organize.com, "Even in a recession, people want to improve their homes, but they want to do it inexpensively. Buying good home products from a reasonably priced online retailer is a much less expensive way to improve your home than, say, hiring a construction team or designer."
2. Don't think that an idea equals a plan. Too often people start businesses with a general notion of what they want to accomplish but lack a solid, well-conceived plan. While a business plan is always important, in a tough economy, it's even more vital to think critically about your product or service, customer acquisition strategy, pricing and promotion plans, and key logistics like inventory management and fulfillment. Similarly, it's important to be very clear about your unique business angle and your differentiation from competitors.
3. Don't be an island. Though entrepreneurs tend to be well versed in a wide variety of areas, even the most skilled entrepreneur cannot expect to be an expert in every aspect of business. From IT issues like network maintenance and website development, to marketing and customer acquisition, to accounting, payroll and legal services, there's too much for most people to handle alone. Have a clear sense of your own strengths, and surround yourself with the right partners and advisors for the remaining tasks.
4. Don't expose yourself to unnecessary financial stress. Starting a business can be extremely costly, both in terms of lost income from a full-time job and in terms of capital investments — but it doesn't have to be. Don't quit your day job too soon, seek outside investors in addition to your own personal assets, and consider lower-cost options for starting your business. For example, if you're going into a retail business, make sure you consider both brick and mortar and online business models, given the considerable difference in capital requirements for each model.
5. If you build it, they may not come. Having a great idea and even a great skill and product are very useful in starting a business, but you also need to have a carefully thought-through marketing plan. Customers won't just come to you. You need to think through all of the tactics at your disposal — from newspaper and radio advertising, to online marketing, to good old-fashioned referrals — to consider how to acquire customers and then turn those customers into repeat buyers.
6. Don't launch without specific goals in mind. Starting a business can be as simple as turning your hobby into an online store or as complicated as building a capital-intensive new product or service requiring research and development. In any scenario, it's important to map out clear goals for yourself and set up times to reassess your progress. Consider setting targets for product availability, establishments of key partnerships and vendor relationships, sales levels, and profitability levels. You don't want to wait until you're two years into a business to discover that you need to make fundamental shifts in your strategy that could have been identified 18 months earlier. Set regular, realistic goals and review periods to learn from your experiences and make changes as needed.
7. Don't be afraid to fail. Many of the most successful entrepreneurs failed before they were successful, and most have had significant failures along their paths to success. Henry Ford failed multiple times before finally launching his successful car company, and Bill Gates and Paul Allen formed a firm called Traf-O-Data before going on to create Microsoft.
Fortunately, more new businesses succeed than fail. According to the Census Bureau, nearly 7 in 10 new small businesses survive at least two years. What's most important isn't whether you succeed or fail in your intended milestones, but rather that you assess and learn from your actions along the way so that no mistake — or spectacular success — takes place in vain.

Sample Federal tax returns for students on F-1/OPT (1040NR-EZ)

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What's your Bowling style?

Stroking
A Stroker releases his or her ball in smooth manner. Strokers often keep their shoulders square to the foul line and their backswing generally does not go much above parallel to the ground. This type of release reduces the ball's rate of revolution, thus decreasing its hook potential and hitting power. Strokers rely on finesse and accuracy, as opposed to crankers, who use speed and power.

Cranker

A cranker is a bowler who strives to generate revolutions using a cupped wrist or excessive wrist action. Crankers who rely on wrist action may have a high backswing and open their shoulders to generate ball speed. These bowlers often cup the wrist, but open the wrist at the top of the swing. Crankers may also muscle the ball with a bent elbow because their wrist is not strong enough to be cupped at the release. Crankers often use "late" timing, where the foot gets to the foul line before the ball; a technique known as plant and pull, hardly using any slide on their final step and pulling the ball upwards for leverage.

Tweener

A tweener (a term derived from "in-between") is a bowler that delivers the ball in a manner that falls somewhere in between stroking and cranking. This modified delivery could use a higher backswing than is normally employed by a pure stroker or a less powerful wrist position than a pure cranker. Some use the term to refer to a bowler who is simply not a "picture perfect" example of either a stroker or a cranker.

Power Stroker

This term refers to a bowler who relies on a high backswing and open shoulders to generate potential ball speed and a big hook, but uses the timing of a stroker. It can also be used to describe a stroker with a high rev rate, or a cranker with an unusually smooth release. A power stroker's release is both smooth and powerful, generating many revolutions via a wrist snap or flick of the fingers, without muscling the armswing.

Spinner

A spinner releases a ball such that it is rotating along a vertical axis (the x-axis) as it moves down the lane. Because of this motion, very little of the ball's surface touches the lane, which is what the spinner intends. The aim is for the ball to proceed until it strikes the head pin, at which time it will proceed to move down the front row of pins in the direction opposite its spin. As it moves down the row, its spin and mass deflect the pins into one another in an attempt to make them fall.

Shovel/Two-handed
A bowler can use a technique without inserting the thumb into the thumb hole to get high revolutions on the ball. The ball is often held with both hands or balanced on the forearm while the bowler executes a bent elbow backswing. The arm is never straightened and the ball is essentially pushed down the lane while the bowler rotates his hand and arm around the ball. Due to similar ball roll and revolutions to the cranker style, it is sometimes considered a variation of cranking.

25 Ways to waste your money

Nearly everyone has spending holes. And as with other kinds of leaks, you may have hardly noticed them. But those small drips can quickly add up to big bucks. The trick is to find the holes and plug them so you can keep more money in your pocket. That extra cash could be the ticket to finally being able to save, invest, or break your cycle of living from paycheck to paycheck.

Here are 25 common ways people waste money. See if any of these sound familiar, then look for ways to plug your own leaks:
1. Carrying a balance. Debt is a shackle that holds you back. For instance, if you have a $1,000 balance on a credit card that charges an 18% rate, you blow $180 every year on interest. Get in the habit of paying off your balance in full each month.

2. Overspending on gas and oil for your car. There's no need to spring for premium fuel if the manufacturer says regular is just fine. You should also check to make sure your tires are optimally inflated to get the best gas mileage. And are you still paying for an oil change every 3,000 miles? Many models nowadays can last 5,000 to 7,000 miles between changes, and some even have built-in sensors to tell you when it's time to change the oil. Check your manual to find the best time for your car's routine maintenance.

3. Keeping unhealthy habits. Smoking costs a lot more than just what you pay for a pack of cigarettes. It significantly increases the cost of life and health insurance. And you'll pay more for homeowners and auto insurance. Add in various other expenses, and the true cost of smoking adds up dramatically over a lifetime -- $86,000 for a 24-year-old woman over a lifetime and $183,000 for a 24-year-old man over a lifetime, according to "The Price of Smoking" (The MIT Press).

4. Using a cell phone that doesn't fit. How many people do you know who have spent hundreds of dollars on fancy phones, and then pay hundreds of dollars every month for the privilege of using them? Your phone is not a status symbol. It is a way to communicate. Many people pay too much for cell phone contracts and don't use all their minutes.

5. Buying brand-name instead of generic. From groceries to clothing to prescription drugs, you could save money by choosing the off-brand over the fancy label. And in many cases, you won't sacrifice much in quality. Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.

6. Keeping your mouth shut. No one wants to be a nuisance. But by simply asking, you may be able to snag a lower rate on your credit card.
When shopping, watch for price discrepancies at the cash register, and make a habit of asking, "Do you have a coupon for this?" You might even be able to haggle for a lower price, especially on seasonal or perishable items, floor models or big-ticket purchases. Many stores will also match or beat their competitors' prices if you speak up. And try asking for a discount if you pay cash or debit -- this saves the store the cut it has to pay the credit-card company, so it may be willing to give you a deal. It doesn't hurt to ask.

7. Buying beverages one at a time. If you're in the habit of buying bottled water, coffee-by-the-cup or vending-machine soda, your budget has sprung a leak. Instead, drink tap water or use a water filter. Brew a homemade cuppa joe. Buy your soda in bulk and bring it to work. (Better yet, skip the soda in favor of something healthier.)

8. Paying for something you can get for free. There's a boatload of freebies for the taking, if you know where to look. Some of our favorites include restaurant meals for kids, credit reports, software programs, prescription drugs and tech support. You can also help yourself to all the books, music and movies your heart desires at your local library for free (or dirt cheap).

9. Stashing your money with Uncle Sam rather than in an interest-earning account. If you get a tax refund each April, you let the government take too much money in taxes from your paycheck all year long. Get that money back in your pocket this year -- and put it to work for you -- by adjusting your tax withholding. You can file a new Form W-4 with your employer at any time.

10. Being disorganized. It pays to get your financial house in order. Lost bills and receipts, forgotten tax deductions, and clueless spending can cost you hundreds of dollars each year. Start by setting up automatic bill payment online for your monthly bills to eliminate late fees and postage costs. Then get a handful of files to organize important receipts, insurance policies, tax documents and other statements.

11. Letting your money wallow in a low-interest account. You work hard for your money. Shouldn't it work hard for you too? If you're stashing your cash in a traditional savings account earning next-to-nothing, you're wasting it. Make sure you're getting the best return on your money. Search for the highest yields on CDs and money-market savings accounts.

12. Paying late fees and missing deadlines. Return those library books and movie rentals on time. Mail in those rebates. Submit expense reports on time for reimbursement. And if you make a bad purchase, don't just stuff it in the back of the closet and hope it goes away. Get off your duff, return it and get your money back before you lose the receipt.

13. Paying ATM fees. Expect to throw away nearly $4 every time you use an ATM that isn't in your bank's network. That's because you'll pay an ATM surcharge, and your own bank will hit you with a non-network fee. Consider switching to a bank, such as Ally Bank, that doesn't charge ATM fees and reimburses you for fees other banks charge. Another way to avoid fees if there's not an ATM in your bank's network nearby is to get cash back when you make a purchase at the grocery store or drugstore.

14. Shopping at the grocery store without a calculator. Check how much an item costs per ounce, pound or other unit of measurement. When you comparison-shop by unit price, you save. For example, if a pack of 40 diapers costs $13, that's 33 cents per diaper. But if you buy a box of 144 diapers for $35, that's 24 cents per diaper. You save 27%! (Of course, buying more of something only saves money if you use it all. If you end up throwing much out, you wasted money.)

15. Paying for things you don't use. Do you watch all those cable channels? Do you need those extra features on your phone? Are you getting your money's worth out of your gym membership? Are you taking full advantage of your Netflix, TiVo and magazine subscriptions? Take a look at what your family actually uses, then trim accordingly.

16. Not reading the fine print. Thought you were being smart by transferring the balance on a high-rate credit card to a low-rate one? Did you read the fine print, though? Some credit-card companies now charge up to 5% for balance transfers. Also watch out for free checking accounts that aren't so free. Some banks are starting to charge fees unless you meet certain criteria.

17. Mismanaging your flexible spending account. For some people, that means failing to take advantage of their workplace FSA, which lets employees set aside pre-tax dollars for out-of-pocket medical costs. Other people fail to submit receipts on time. And the average worker leaves $86 behind in his or her use-it-or-lose-it FSA account each year, according to WageWorks, an employee benefits provider.

18. Being an inflexible traveler. You'll save a lot of money on travel if you're willing to be flexible. Consider traveling before or after peak season when prices are lower. Or search for flights over a range of dates to find the lowest fare. Booking at the last minute also can save you money because hotels and airlines slash prices to fill rooms and planes.
19. Sticking with the same service plans and the same service providers year after year. Hey, we're all for loyalty to trusted service providers, such as your bank, insurer, credit-card company, mutual fund, phone plan or cable plan. But over time, as prices and your circumstances change, the status-quo may not be the best deal any more. Smart consumers are always on the lookout for bargains.

20. Making impulse purchases. When you buy before you think, you don't give yourself time to shop around for the best price. Take the time to compare prices online, read product reviews and look for coupons when appropriate.
Make it a policy to give yourself a cooling-off period in case you're ever tempted to make an impulse purchase. Go home and sleep on the decision. More often than not, you'll decide you don't need the item after all.

21. Dining out frequently. Spending $10, $20, $30 per person for dinner can be a huge drain on your wallet. Throw in a $6 sandwich for lunch every day and you've got quite a leak. Learning to cook and bringing your lunch from home can save a couple hundred bucks each month. When you do go out, consider getting carry-out instead of dining in (you'll save on the tip and drink), skip the overpriced appetizer and dessert, and search the Web for coupons ahead of time.

22. Trying to time the stock market. In trying to buy low and sell high, many people actually do the opposite. Instead, employ the simple strategy of "dollar-cost-averaging." By investing a fixed dollar amount at regular intervals, you smooth out the ups and downs of the market over time. If you take out the emotion and guesswork, investing can become less stressful, less wasteful and more successful.

23. Buying insurance you don't need. You only need life insurance if someone is financially dependent upon you, such as a child. That means most singles, seniors or kids don't need a policy. Other policies you can probably do without include credit-card insurance (better to use the premium to pay down your debt in the first place), rental-car insurance (most auto policies and credit cards carry some coverage), mortgage life insurance and accidental-death insurance (a regular term-life insurance policy will do the trick).

24. Buying new instead of used. Talk about a spending leak -- or, rather, a gush. Cars lose 20% of their value the moment they're driven off the lot and 65% in the first five years. Used models can be a real value because you can get a car that's still in fine working order for a fraction of the new-car price. And you'll pay less in collision insurance and taxes, too.
Cars aren't the only things worth buying used. Consider the savings on pre-owned books, toys, exercise equipment, children's clothing and furniture. (Of course, there are some things you're better off buying new, including mattresses, laptops, linens, shoes and safety equipment, such as car seats and bike helmets.)

25. Procrastinating. Time is an asset money can't buy. Start investing for retirement as soon as possible. For instance, if a 40-year-old saves $300 a month with an 8% return per year, he'll have $287,000 by age 65. If he had started saving 15 years earlier at age 25, he'd have more than $1 million.