Avoid These 11 Business Mistakes Which Are Costing You Money
In the fast-paced world of business ownership, losing money because of business mistakes is a death knell. Luckily, it’s not too hard to avoid if you stay vigilant and follow the tips below.
11 Business Mistakes
Not Using Contracts
I’m not here to say everyone in business is untrustworthy. Rather, many businesses are simply lazy. They’ll fall behind on payments or forget to meet specific deadlines in time unless they are constantly reminded. Instead of you having to continually remind them yourself — a duty that will cost you time and energy — you can just rely on a contract to do it.
Also, there are rare instances where third parties will try to cheat your business out of money, and a contract prevents that.
Rocketlawyer is a site that helps you draw up properly written contracts for an attorney to review.
Having One Founder
One person just doesn’t have enough time to manage an entire company effectively most of the time. There are a lot of areas a founder needs to invest in, and by themselves, they cannot get the most out of each of those areas. The result is that the founder cannot get their money’s worth from their investments.
If there is more than one founder, they can split up the responsibilities to manage each department properly.
You can have the greatest product in the world, but you are leaving money on the table if you don’t know how to market it. I can’t tell you how many times I’ve seen people work extremely hard to start a great company, but then end up failing because their marketing was lacking or nonexistent. It’s a very common business mistake.
Since an entrepreneur’s company is present in everything they do during their lives, it’s easy for them to forget that most people have never heard of it. They would hand over their money if they had, but they haven’t. Part of the entrepreneur’s job is to let them know.
If a workforce cannot communicate efficiently, their work will slow significantly, and a lot less will get done. And this will almost inevitably mean failure for the company.
Make sure the employees you onboard are good communicators and are familiar with whom they need to talk to. Your workforce is one of your company’s most substantial investments, and you need it to pay off to succeed.
If a business’s prices are too high, they will not get many customers. If they are too low, they won’t get enough income per sale. Finding the “sweet spot” that is the highest price possible without starting to turn away a lot of potential clients is of the utmost importance. Setting prices too high or too low is a big business mistake because it means you’re collecting less money than you should be for the same service.
Too Many Business Loans
When they’re new, many businesses figure business loans are the best way to get off the ground. In fact, bootstrapping your own money is by far the best way to build discipline and stay debt-free. It may be slower, but Forbes agrees that bootstrapping builds a more solid foundation for success.
Investment In the Wrong Areas
Entrepreneurs often spend too much money on product development and forget to invest correctly in other areas. But running a successful business entails balancing your company properly.
Investing too much in certain areas will cause that area to thrive, but the other areas of the business fail when it comes time to support those thriving areas. This has a negative impact on cash flow.
Weak Web Presence
In 2020, web presence is one of the most essential parts of successful business practice. And a good web presence involves more steps than you might think: hiring a web designer, an SEO expert, copywriters, graphic designers, and more.
Many entrepreneurs, especially the older ones, forget about all these steps or try to cut corners and fail to reach their target market because of it.
Expansion is not always a good idea. The common misconception is that a business should try to expand as rapidly as possible, but that couldn’t be further from the truth.
If your business is going to expand, make sure you’re ready for it, and you have a good game plan for the expansion. Otherwise, you’re only going to cost yourself money.
Hiring Quantity over Quality
Especially for new businesses without much budget, it’s tempting to hire cheap talent rather than going for quality. Resist the temptation.
Well-paid higher quality workers not only produce more work at a more top halibut, but they are less likely to leave the job. Employee turnover is definitely something you want to avoid because training new workers are time-consuming and expensive.
Poor Cash Flow
Cash flow is not intuitive, but 82% of small businesses fail because they cannot optimize it.
Basically, you need to make sure your company is paying off the right debts at the correct times. A strategic approach to cash flow rather than a “pay a debt when it comes up” policy will help your company manage interest rates and ultimately lower its expenditures.
Business mistakes are inevitable — no entrepreneur is perfect. Keep these 11 common business mistakes in mind to minimize your company’s losses and save some cash!
FOR A MORE ANECDOTAL LOOK AT THE 15 BIGGEST BUSINESS MISTAKES EVER MADE, CHECK OUT THIS VIDEO!