3 Lessons Every Small Business Owner can Learn from the Elon Musk Fiascos

Elon Musk

Elon Musk

By now, you’ve likely heard that the Securities Exchange Commission (SEC) has filed formal charges against Elon Musk in the Manhattan Federal Court System as a result of some pretty strange actions by the inventor.

Back in August Musk tweeted out that he had secured the funding needed to take his automobile company, Telsa, private. The stock market reacted instantly, and stocks for the company went up 11 percent. But 17 days later, Musk claimed he had decided not to pursue the deal and stocks plunged.

Federal regulators aren’t taking the situation lightly. In the official court filing, they say, “Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors."

While the lawsuit makes for interesting news, there are some things about it—and other recent actions by the investor—that would-be entrepreneurs and small business people should pay attention to. Here are three things you can learn from Musk—and use them to build a better business.

1. Don’t Burn Through Cash

One theory about why Musk sent the fated tweet is that the company, which burns through cash like crazy, was in need of more so he sent the tweet in hopes of raising the stock value. No one knows for sure why Elon would send a tweet like that, but what we do know is that burning through cash in a startup is a sure way to get yourself into trouble.

When starting a business, or running an existing one, it’s crucial that you use your cash wisely and don’t begin to overspend just because money is coming in. In fact, that’s one of the biggest reasons new businesses have to close the door.

Start with a business plan—no matter how many of today’s get rich quick gurus tell you don’t need one—and stick to it. Depending on the type of business you start, it doesn’t have to be a full document. For example, some simple businesses can use a one-page business plan and get along fine.

But the bottom line is you need one, and you need to stick with it.  A financial plan is key to a successful business, period.

2. If You’re Going to Go Big, Stay Humble

Musk also got in a bit of trouble with his investors recently during a conference call. One of the investors wanted some information about the future financial needs of his company, and instead of answering the question, he said "Excuse me. Next. Boring, bonehead questions are not cool. Next?" It was something that might come from a teenager, not the leader of a large company, and many investors began to worry.

A business is only as good as the people running it, and investors look at the leaders of a business to determine whether or not to risk their money in it. If you have big aspirations for your company and plan to seek investors, you should remember that.  What Elon Musk forgot is that while he may have the ideas for his products, he relies on investors to fund them. And if he continues to treat them so poorly, he may end up with a head full of ideas and no one willing to bring them to fruition.

3. Remember Your Branding at ALL Times

Recently, Elon Musk appeared on a show while smoking weed. Again, no one understands what drives Elon Musk to do the things he does, but there’s one thing I do know: he doesn’t understand branding. Or if he thinks he does, he’s way off the mark.

In fact, the former head of HR at Telsa Gabrielle Toledano recently said that she made it a point to check Musk’s Twitter account every day to make sure he wasn’t tweeting dumb stuff. That’s a problem.

There is simply no way to juxtaposition the head of a multi-billion dollar company and a guy waving around a joke making funny faces. It just doesn’t work. Musk may be on a ride right now, but with this type of erratic behavior it will, in my opinion, end badly.

Which brings us to your business. Branding is key for the success of any type of business, small or large, and before you ever open your doors, you need to solidify yours. I am passionate about small business branding, and believe that it’s not possible to develop and grow a successful business without it.

Elon Musk has been doing well for the past few years, but will his unprofessional and arrogant behavior bring him down? That’s yet to be seen, but if the SEC has its way, Musk will no longer be allowed to act as an officer or director of any public company.

Starting a business and running it is a serious endeavor, but if you want to build a company that lasts for the long-term, you should avoid many of the mistakes Elon Musk is making. After all, when your face is the face of business, shouldn’t it be trustworthy and reputable? It should if you want long-term success.