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13 Common Mistakes I Often See Small Business Owners Make
Nov
I spent 17 years in the company world working directly with small businesses and 10 years as a small business owner myself. During that point, I saw many mistakes people made, but some were more common than others. These are probably the most common mistakes small business owners make.
1. Revenue ≠ Profit
Revenue is just not the identical as profit; they’re not even in the identical ballpark. Let’s say you receive a check for $10,000. It’d feel like a windfall, however it’s not pure profit. After covering expenses like worker salaries, insurance premiums, supply costs, and employees’ compensation, what you’re left with is commonly much less.
2. Tax Write-Offs Aren’t Free Money
There’s a myth that tax write-offs are like free money. They’re not. As an example, in case you spend $1,000 on office supplies and also you’re in a 25% tax bracket, you don’t get $1,000 back in your taxes. You save $250 in your tax bill. So, you’re still out $750.
3. Seasonality in Business
All the pieces has its season, and business isn’t any exception. Take something so simple as chewing gum—it’s fascinating, but its sales plummet when it’s raining. If a month brings about 10 rainy days, this may lead to a lack of 30% or more in that month’s expected revenue.
From my very own experience, I once owned a bar and our survival through the primary yr hinged on acknowledging this seasonality. Aware that summer can be slow, I negotiated the rent all the way down to half during this era and selected to shut from June 1 to September 1.
This decision helped cut costs significantly. Back then, rent was $1,500 a month, so during those three months, I saved about $3,000. If I had chosen to remain open without negotiating the rent, we might have faced a $10,000 deficit.
4. 40-Hour Workweek
In the event you’re steering a small business, cruising at a 40-hour workweek won’t all the time cut it. Sure, it’s a typical full-time job’s hours, but while you’re on the helm, what you are promoting might have more from you.
Family events and emergencies are, in fact, non-negotiable – those days off are vital. But outside of those, the overtime you invest could make a major difference in growth and stability.
5. Picking the Flawed Product
Selling the identical thing as everyone else? Let’s face it, you’re not going to make it.
I get it, you see those Alibaba deals and think you’re on the point of creating the following big brand. But here’s the tough love: it’s not going to occur.
Irrespective of who you hire to spin your marketing gold or how glossy your website looks, selling the identical widget as 100 others means you’re treading water. And trust me, I’ve had this talk too again and again. It’s a troublesome circle to square, getting such businesses off the bottom.
The underside line? It’s got to be unique. Unique sells. That’s the ticket to moving product and standing out from the gang.
In case your product isn’t a house run hit, something super unique that you would be able to’t find on the shelves of Walmart or with a fast search on Amazon, you’re going to hit a wall.
6. Not having the fitting friends
Befriend the fitting folks, and also you’ll not only save a ton of cash, you’ll also save yourself from a heap of trouble. There’s real value in having friends who jump in while you’re in a bind. Imagine your AC sputters out during a heatwave or your pipes determine to reenact Niagara Falls – you’re going to want help, fast.
I’ve been there, waiting on a fix, watching money and time drip away. But, because I had the fitting contacts – people I’ve shared a meal and laughs with – I didn’t need to wait long. A buddy with tools and know-how is price their weight in gold. So, make those connections.
7. Not Having Thick Skin
In the event you hesitate to let someone go when it’s crucial, what you are promoting could suffer even quicker. And let’s face it, the percentages of success are sometimes slim – you’re taking a look at successful rate of 20% or less. That’s why try to be mentally prepared to dust yourself off and jump back within the saddle immediately if things don’t pan out.
8. All the time Get It in Writing
It’s a golden rule: if it’s not written down, it’d as well not exist. Renting a property? Secure a signed lease. Teaming up with a friend or business partner? Draw up a transparent agreement outlining work expectations and profit sharing.
Hiring a contractor? Have a contract that details the job scope and payment terms. And for workers, don’t just depend on a handshake – get an employment contract in place, together with a comprehensive written policy manual.
9. Starting with Friends & Family
You’ve probably heard this a thousand times, however it bears repeating since the standard story keeps playing out: Partners normally hit a rough patch just when the money starts rolling in. Despite the initial belief that “we’re higher friends than that,” money has a way of testing bonds.
Everyone’s slaving away to construct the business, but once the profits begin to materialize, suddenly the developer is convinced that their genius coding is the key to success, deserving of a much bigger piece of the pie.
Meanwhile, the marketing guru is certain it’s their savvy strategies bringing within the bucks, and so the tug-of-war over money begins. It’s a classic scenario – one which’s avoided by having clear agreements from the get-go.
10. Not Willing to Take Risks
Don’t start a business in case you’re not willing to take risks. You’d be way higher off working for somebody who does.
Just take into consideration Formula 1 drivers – those who hesitate on the brakes are rarely those on the rostrum.
11. Cutting Corners
We’ve all heard the old adage, “slow and regular wins the race,” and yet, the temptation to take shortcuts is a standard pitfall for a lot of eager business owners. Attempting to ‘work’ the system might seem to be a clever move to get ahead quickly, however it’s often a recipe for disaster.
These shortcuts might give the illusion of progress, but they’ll result in shoddy workmanship, a damaged status, and even legal troubles. The reality is, there’s no substitute for putting within the exertions, maintaining integrity, and constructing what you are promoting step-by-step.
12. Money Crunch
Underfunding is probably the most common reason small businesses fail. Give it some thought like planning a road trip without enough gas in your tank. You may have one of the best snacks and an epic playlist ready, but in case you can’t make it to the following station, your journey ends early.
It’s the identical with what you are promoting. In the event you don’t have enough money to maintain the lights on whilst you’re still growing, you’ll hit a wall.
13. Not Cutting Ties When Customers Don’t Pay
Some customers just won’t pay their bills. It might sound harsh, but when someone isn’t paying up, it’s often best to chop them loose. It’s not your job to bankroll their balance. You’re running a business, not a charity, and chasing after unpaid invoices could be a huge time-sink.
As an alternative of playing tag with payments, your time might be a lot better spent looking latest customers – the type who actually pay their bills.
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