Mistakes That Can Cost Your Business
Posted on 3rd June 2021 at 14:20
Nobody said running a business would be easy. You’re bound to make mistakes from time to time. However, the number of mistakes that cost your business money can be greatly reduced if you correct them quickly and learn from others who have made them in the past.
These are some common mistakes small business owners have made repeatedly. If you can either prevent or correct them, you should be able to run a more successful operation. It’s important to gather as much information as you can and there’s loads of advice and help online, so you don’t make the same mistakes as I did when I first started my business.
There is a reason big companies thrive so take your lead from some of them. Think about the people who’ve inspired you during your career who have the same work ethics as you do. There are some great business resources that can help you. I wish I’d known about the Federation of Small Business Click here to find out more about FSB when I first started, it would have saved me a lot of time just with the legal jargon you need to have in place when starting a business.
After running a business for many years, I’ve learned any successful business owner needs a good team around them, whether they are outsourcing services they aren’t skilled at, or surrounding themselves with other businesses who complement what they do and therefore make good referral partners. I have also found a few things NOT to do, which most small businesses can learn from. Common Small Business MistakesThe list below outlines some common small business mistakes. From simply as not doing things you’re not good at, to not mistreating suppliers and not letting customers mistreat YOU. Here are some common business mistakes. Don’t do things you’re not good at. You know your business, but you’re not an expert at everything.
So, stop doing things that you don’t do very well and instead focus just on the things that you do best. Doing the stuff you don’t do well is one of the most common small business mistakes because it’s so easy to try to do everything yourself. But really, it’s beneficial to hire experts to help you. This can mean hiring someone to do your bookkeeping, send out emails, manage your diary or upload new blogs onto your website, arrange travel or chase invoices, offer great customer service or you may need more sales leads – all of this takes time. If you’re doing stuff like this, you’re probably wasting your time. Yeah, I know there’s a cost to hire someone.
But it costs you more in time and lost opportunities to do everything yourself. For more information about why you should outsource why you should outsource and what can be outsourced, check out Click here Don’t blame others. That’s your name on your tax return, your name on the articles, and your name on the front door. It’s your business. You get all the riches and glory. But you also get all the headaches. That’s because every problem—every issue, every challenge, every mistake, everything that goes wrong—is ultimately your fault. You hired the people. You bought the tools. You sold to the customers. You chose the priorities.
This is your show and if anything happens, it’s your responsibility. This is just one of the common small business mistakes entrepreneurs can easily make early on. Tackle any complaints quickly and have a complaints procedure in place and make it clear to avoid any disparity. Don’t ignore the math. Quick: you’re selling something for £100, so what’s your margin? How many of these things do you have to sell in a month to break even?
How often does your inventory turn? What happens to your debt maintenance if interest rates go up a point? What would be the impact of a 5% rise in your supplier’s costs? What percentage of your sales is overhead? These are the things that my most successful clients know off the top of their heads. They’re boring, mathematical, numerical facts that drive the success (or failure) of every business and not knowing your profit margin is one of the top mistakes new business owners make. Not interested?
Then hire someone who is or go work for someone who is. Don’t take your employees for granted. Your employees have lives. Really, they do. They have children. They have car troubles and sick parents and dental appointments. Believe it or not, they would rather be at home with their families than working in your office. But, when they’re in your office, they’re doing something important: making you money. Don’t take this— or them—for granted. Offer competitive compensation, good benefits, and, most importantly, an ear for when they want to vent about a professional or even a personal issue. They are, after all, people—and they all want to do the best job they can. Your job is to give them the best environment to accomplish this. Don’t mistreat your suppliers. I hate it when people tell me to delay paying suppliers to help my cash flow. How would I feel when this happens in reverse from my customers? I can answer that because it does happen.
I resent it and I give those slower-paying customers less attention than the ones who pay on time. Don’t fool around with your suppliers. Treat them well. Pay them early or at least on time. Take discounts if they offer them. But behave as a partner would, because you may need that key supplier in a pinch and, if you’ve got a good relationship, that person will come through and be there for you if/when needed. Don’t get mistreated by your customers. Some customers aren’t great customers. They complain unreasonably. They pay late and haggle too much. Your goal is to do business with people that you enjoy doing business with. You should never fire a customer because let’s face it: We all need customers. But you can price those customers that you’d like to see go away a little differently. If they want to behave that way, then they should pay more—that’s your compensation for putting up with their nonsense. Otherwise, let it be their decision to leave you, not yours. Don’t ignore your customers.You work hard to get your customers. So, don’t ignore them. Ask any successful business owner and they’ll tell you it’s much more expensive to acquire new customers than it is to grow your revenues with existing ones. And you know what? They’re right. Are you staying in close touch with people who have bought from you in the past?
Are you making suggestions or offering them additional products and services that can improve their lives or businesses? Are you showing enough gratefulness with special discounts or incentives for loyal customers? Focus on your existing customers first and, believe me, the new ones will come. Don’t forget to pay your taxes. You hate it. So do I. But it’s a fact of life. When your accountant tells you to pay, then pay. Meet with your accountant a few times a year depending on how your business is doing. But do not ignore your tax liabilities—they will quickly grow and could potentially bury you. I’ve seen it happen. It’s not pretty. Don’t invest in too much technology. One of the common mistakes small business owners make is investing too much in technology. If the tech giants had it their way, you’d not only be upgrading their software every month, but you’d also be buying every new gadget that comes on the market as soon as it comes on the market. Don’t do this. Measure the cost of it over a five-year period with the benefits it will produce more business, better productivity, and lower costs. If you can get yourself a good return on your money, then buy that tech. Otherwise, invest your money elsewhere in the business and there are loads of free resources online to help when you first start out. Don’t put all your eggs in one basket. Business owners—and I’m one of them—can easily get in trouble when you’re relying too much on one thing. In fact, putting all your eggs in one basket is one of the most common small business mistakes. Diversify. Spread the risk. Have a backup plan. Always consider alternatives. Relying too much on one thing for your livelihood could set a bad precedent. Don’t worry about your competition. Your competition? You’re better than they are! And yes, business owners worry about competition but really, it’s one of the most common mistakes small business owners make. Don’t try to keep up with the Joneses.
That’s just silly. Be authentic, be you – YOU are unique, you just have to believe that. Of course, you should keep an eye on your competitor, once in a while, check out their website, visit their shop, look at what they’re doing. But then move on and focus on doing what you’re doing, because if you’re doing the right thing, then you won’t need to even think about what your competition is doing. Oh, one other thing: never, EVER, badmouth your competition when you’re talking to potential customers. Always take the high road, and never forget that competitor might be an answer for you someday when you have limited resources, or he/she might be a potential partner, buyer, or seller in the future. Don’t ignore the future. Why are you running this business? You want to provide a livelihood for you and your family and hopefully for your employees, too. But you’re also trying to build something of value for the future. So never forget about the future. What is your five- or 10-year plan? What are you doing today that will build your company’s value tomorrow? Are you putting money away for retirement? Do you have an exit plan? If there are children, rest assured they’re not going to be children forever, so do you have a succession plan? The smartest business owners I know are always looking ahead. Just doing things day to day isn’t a recipe for your future success. Don’t be uncool…unless you need to be uncool Be nice. No one wants to work for an ass. Life is short. However, don’t be a pushover. Sometimes—hopefully rarely, you’ll need to be stern. Maybe it’s with a customer who owes you money, a supplier that doesn’t deliver when promised, or an employee who’s constantly late. Some of the greatest leaders in history were uncool and a jerk when they needed to be. In your business, things will happen sometime or other that will require you to be stern, if not forceful. When it does you may need to temporarily be uncool.
Don’t work too many hours. I know—running a business takes a lot of time, especially when you’re just starting out. But life is too short (seriously), and let’s always remember what this is all about: enjoyment. One of the easiest common small business to make is to work too much. The smartest business owners I know make it a point to take a break. They relax on Fridays during the summer or take a few weeks off to go on holiday to recharge. They’re never completely out of touch, but they go away to think and to relax and to re-energize themselves. That way, they can come back rested and ready to take on the challenges of running a business. Work to live—don’t live to work. Don’t stop taking opportunities to learn. Holidays are important, but learning is even more important. That’s why many successful leaders I know oftentimes combine both. They travel to conferences and workshops. They read books, watch webinars, and listen to podcasts to better develop themselves personally. They’re always up for talking to other people who can teach them a thing or two (and they’re happy to share their knowledge. Go to meetings, attend events, walk over burning coals.
Do whatever you need to do to ensure you not only grow as a businessperson but also as a human being. Ignoring education will pave a quick road to decline. Finally, don’t lose sight of why you’re doing this. Why did you start your business in the first place? How come you quit your job and started on your own in the first place? What was the reason you took your life savings? Was it for control? A mission? A chance to do something unique? A way to give something back to the world? A method of making more money? All of these are fine, and the reasons why you’re a business owner are your own. But, occasionally, take a pause and reflect on why you decided to do this in the first place. Doing so will help keep you grounded and pointed toward the original goals that you had set. So, there you have it—some common small business mistakes, aka some of the things I learnt the hard way, and what NOT to do if you want to succeed as a business owner. Next Steps: Want to learn more? Sign up for my monthly blog and get the latest tools and resources designed to help you grow your business. Click here
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