While it’s natural to learn from your mistakes, taking a glance below at some of the more common business owner mistakes may help you learn from the fumbles of others – without having to make them in your small business.
Setting Prices Too Low
When starting out, some small business owners have no idea how to determine a correct price point for their product or service.
In the name of being competitive, they set their prices far too low. This, obviously, is not the best thing for your bottom line.
Also, it’s difficult to explain to customers the need to have a significant price increase in the future.
Instead, do the necessary research to set your prices correctly in the first place.
Not Hiring the Right People
To save money during the start up period, many business owners hire whoever they think will do the work for the least money.
For a variety of reasons, this is a bad idea. You need quality people. This is especially true of anyone who will have any type of interaction with the public.
They represent you and your business. Not just anyone should be allowed to do that.
Not Having Properly Worded Contracts
Yes, lawyers are expensive. Yes, you can probably create a nice looking contract in your word processing program.
The problem is that no matter how great a document looks, it’s the wording that counts. Your contracts with customers and employees as well as any needed confidentiality agreements and other contracts all need to be legally binding.
Spend the money to have a lawyer approve all written documents. A few hundred dollars now could save you thousands in the future.
Not Keeping Records
Another mistake business owners make is not keeping proper records. This can be a serious problem should your small business ever go through an audit.
It’s also important to keep employee records according to federal and state guidelines. Failing to do so can result in fines and other actions. There is a lot to know when it comes to accounting and human resources.
You need to either do the research yourself or hire someone who can keep the records for you. What your small business doesn’t need is legal problems!
Spending Too Much, Spending Too Little
Some small business owners make the mistake of spending all their seed money within the first few months. They splurge on items that are not directly going to influence the bottom line and then find themselves in trouble when the revenue is slow to come in.
On the other hand, some entrepreneurs guard every penny. Both of these actions are common business owner mistakes. Spend where it matters most for your particular line of business. Save the splurges for after the money starts coming in.
There is no way to make a list of every common mistake made by business owners. The examples above are just a few of many. What you can do to avoid making costly business owner mistakes is to not make any decisions until you have done the necessary research – and put some thought into it.
Each decision you make, especially early on, is going to have an impact on your success. A few extra days of research will help ensure that you boost your bottom line rather than sabotage it.
