"Turns out, I was dealing with an internal syndicate of husband-wife-cousins-brothers with different last names all bonded by blood – not objectivity," Wilson says. "When the company turned south, selective surgery was impossible, and the board ended up amputating multiple limbs. We were dead either way."
Singh adds to that line of thinking, saying that a company having an incredible idea for a product or service isn't enough. An investor should consider the environment in which the business will be trying to produce the next great thing.
"Very often, it's the attributes of the ecosystem that will affect the success of the company – how difficult it will be to scale, how long it will take and how likely it will be cannibalized," Singh says.
Forgetting your company's retirement plan. Cary Guffey, a financial advisor with PNC Investments in Birmingham, Ala., says he sees this a lot – people getting excited about the vast array of investments out there but forgetting about their company's seemingly boring retirement plan.
"Most companies have reinstated matching, so not participating is leaving free money on the table," Guffey says. "Put another way, if you have a company that matches dollar for dollar up to 3 percent, built-in, you have a 100 percent return on your investment."