10 Mistakes Small Business Owners Need To Avoid
Tuesday, November 29, 2005
Being successful in business is a delicate juggling act of doing the right thing while simultaneously avoiding costly mistakes.
Unfortunately, many small business owners--especially new business owners-- make simple mistakes that could easily be avoided with a little diligence and some inside knowledge. Here's a list of ten of the more common errors small business owners usually make:
1. They undercharge
When first starting out, many business owners tend to undercharge for what they sell. There are two reasons for this. First, they don't know how to correctly set an effective price, and second they think they need to have the lowest price in order to get business. In order to survive in business, it's crucial that a business owner receive maximum reward for his or her efforts.
2. They concentrate exclusively on sales
While no one can deny the benefits of having a boatload of business, focusing exclusively on sales is oftentimes a recipe for disaster. A "more sales only" mentality and growing too quickly are classic examples of how a business can fail during its peak growth phase. To succeed in business you must focus on your WHOLE business, not just parts of it.
3. They extend credit too easily
If selling on credit, be sure to perform credit checks on all of your customers. Also, make sure your customers completely understand and agree to your payment terms BEFORE doing business with them. Many slow paying customers like to take advantage of ambiguities in payment policies. While it may be attractive to take on as much business as possible--especially when bills need to get paid--keep in mind that it's better to have no business than to give away free business.
4. They think about taxes after the year is over
Since taxes represent a large expense in any business, it's absolutely essential that you do everything possible to minimize the cost. This means getting a grip on your taxes BEFORE and DURING the tax year, not after.
5. They don't have a plan of attack
A lot of business owners and self-employed individuals don't have clear, concise and written goals. And the goals they do have are frequently vague and imprecise.
6. They don't know how to hire and keep good employees
A common problem business owners have is their inability to effectively manage their employees. Not only do they make hiring mistakes, but they also don't know how to keep good workers. Besides the owner, a good employee can be a company's most valuable asset. In fact, in a small business employees can actually make or break the business. That's why it's essential that you hire the right person for the job.
7. They don't provide outstanding customer service
While numerous factors are responsible for success, by far the easiest way to expand your business is to provide customers with customer service that is "beyond industry Standards". Doing so is like planting money seeds that will grow and yield basketfuls of profit.
8. They are economically dependent on a small group of customers
The easiest way to give away financial control of your company is to grow your business on a small group of customers. While this may look tempting and free of hassles at first, relying on a small group of customers is not a good thing and it should be avoided at all costs.
9. They let emotions get in the way of sound business decisions
Some people get consumed with their emotions and frequently make business decisions for the wrong reasons. Examples of this include spending money on sexy, expensive advertising just to boast or beat their chest. Other examples include keeping unproductive employees because they feel sorry for them, or going out and spending crucial capital on equipment that isn't needed yet. To make good decisions, make sure you rely on the facts and sound business judgment.
10. They fail to develop as leaders and managers
Many business owners limit the amount of success they attain by failing to continue learning. Running and managing a successful business doesn't require exceptional talent, but it does require basic business knowledge. Without this knowledge you're at a substantial disadvantage. You should do everything possible to learn whatever you can about the complexities and nuances of your industry or profession--and not just once, but regularly.
Tags: business mistakes, small business
posted at 7:48 AM
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