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Common Small Business Mistakes

Updated: Dec 15, 2022





When first starting your small business you may not realize that

there are mistakes you may make at different stages of your

businesss growth that can slowly kill it for months or even years if

you don't watch out for them?


These mistakes are not just restricted to the new business

owners. Many operating businesses, including those you may

think are successfulî because they've been around for 10 years,

are often still making them and are most likely losing a lot of

money and/or wasting a lot of time in the process.


Although some of these mistakes seem aimed more at service

type companies, they really do fit the bill for almost any type of

business. Let's go over a few examples that you can use for future

reference.


Underestimating project or service time is a big one.


This relates to service companies as well as companies that sell a

product. This is a service company's bread and butter. If you don't

estimate the time and effort required to perform each service your

business offers you will lose out and there is little you can do about

it except learn from it. The best way to estimate time required to

do the job is to do it once yourself or watch your best employee

perform the task, then determine the appropriate fees that you

should charge for the service.


Not knowing your company numbers and setting prices to low.

It is a common mistake to

use a competitor's fees as your pricing gauge without actually

knowing why they use those numbers. Consider for a minute what

will happen if you take a competitor's price, cut it by 10% and then

start selling.


What if the competition has a bad pricing structure and is barely

making money or even losing money?


What if your costs are more than theirs?


While it's a good idea to know your competitors pricing structure

and maybe even use it as a starting point you shouldn't base your

whole strategy on it.


Different market sectors have their own variables as far as costs

go and you should be aware of them for your project or product

pricing. What you pay for a product you are going to sell is not the

only cost to have in your head when you are pricing your products.

Considering how much your labor and materials cost for a service

is only a part of an hourly rate.


Employees also cost more than just salary and not every

employee is part of your labor cost. Every company has insurance

to pay for. There are overhead expenditures, quality factors that

need to be part of your pricing structure. What you include as

standard services or standard product features as well as job

site etiquette or in store service or warranties all need to go into

your pricing.


- Not charging for all of your time and costs is mistake most

business owners will admit that they made.


For instance let's say that you run a service company. You can't

just undercut your competitors price to acquire the job; you have to

ensure that your costs will be covered in your rates. Stores

undermine themselves, for example, when they put more people

on the floor for customer service but don't charge for it. These

things cost you money and when your competitors don't do them it

costs them less money.


As a business owner you need to believe that you are providing

your clients worthwhile wares that deserve to be paid for. If you get

the chance to explain why your prices are higher, then take that

opportunity and do it. If they don't like the fact that you include

things that others charge extra for later or that you treat them

better, then they are most likely completely price shoppers. You

don't want them as regular customers anyway. Trust me.


- Not getting paid fast enough is another one that easily creates a

cash flow problem.


As long as you are actually making enough

money to pay the bills, this problem can be solved, prevented or at

least managed. To avoid this bill customers very promptly. After all

that ís the reason you are doing the work- to get paid.


- Failure to have solid systems and procedures in place.


Having no procedures and systems in place for tasks like billing,

collections, payroll, interviewing, hiring, job responsibilities,

manufacturing, operating equipment, maintaining equipment and

inventory procedures will help things run smoothly and reduce

expenditures as well.


- Spending too much advertising money without tracking the

results.


There is no point in a marketing campaign if you do not put things

in place that allow you to measure how well the plan is working.


- Spreading yourself too thin is a classic mistake made by every

entrepreneur.


The key is to figure out when you are at that wearing too many

hats point and start getting some help. Not getting help or waiting

too long can kill a company. The three big issues people like to

tackle themselves but are usually the ones they are the least

knowledgeable about like; legal issues, accounting, bookkeeping

and daily operations issues.


Keeping an eye out for these potential problems is always a good

idea, the end of a year is an excellent time to make sure you are

not making these errors. Take the time, or make the time to

determine if have issues to address. If you don't know how to stop

or fix the mistakes, then find some help. The success of your

business may depend on it!



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