THREE REASONS TO SAY NO THANKS

THE RISK OF OVEREXTENDING YOURSELF

“Entrepreneurs are easily enticed by highvolume orders, a big-supplier tactic that could sink your business,” says Joel Shulman, professor of entrepreneurship at Babson College, and founder and managing director of Entrepreneur-Shares, a Boston money-management firm. The ploy: A large-quantity order persuades you, against your better judgment, to significantly lower your price. One business owner he advised, who was typically paid more than $3 a unit, was offered 80¢ by a big-box retailer. Understand your true costs, says Shulman: “By the time you pay for manufacturing, logistics, and, in many cases, physical distribution to brick-and-mortar retailers and make a commitment to take back unsold items, there’s a good chance you’ll have lost your shirt.”

THE THREAT OF UNFORESEEN EXPENSES

Smart, if undercapitalized, entrepreneurs try to stick to a budget, but a promising business opportunity can lead them to abandon the plan. “Complex contracts or demands from prospective clients may require you to consult with attorneys or business advisers,” says Shulman. Even worse, he says, is realizing midway through a job that you can’t finish it with existing resources. Suddenly, you need to hire additional personnel or find more space. If you believe the incremental costs— including aggravation and time—of a project will exceed its value, turn it down.

THE POSSIBILITY OF GETTING SIDETRACKED

“A basic failing of many entrepreneurs is allowing themselves to get sidetracked from their primary goal,” says Shulman. With competition so fierce, he says, business owners who don’t focus their time and energy can get crushed. Interestingly, it’s much easier to say no to bigger jobs for which you know you lack expertise. “It’s the less substantive opportunities—so small you don’t think taking them on will dilute your vision—that can cumulatively siphon off critical resources of time and money,” says Shulman.