10 Bad Business Mistakes You Don’t Know You’re Making

As you build your business, it’s inevitable that you’re going to make some less-than-perfect decisions. Yes, the fewer blunders you make along the way, the better off you’ll be. But the way you recover from the business mistakes you do make will define you as a business.

Today, we’re looking at some of the common mistakes small business owners make, how to avoid them and how to bounce back if you trip up.

Business  Mistake #1: Not Having A Plan

Building a business is hard work. And it’s that much harder if you’re inadvertently spending your energy on the wrong tasks.

So set your sights by establishing SMART goals. Plan for the month, the quarter, the year and the next several years. When you define the direction you want your business to take, you prioritize your activities, track your progress and make smart choices about how you spend your time and money.

Business Mistake #2: Relying On A Handshake

Transactional misunderstandings and bad business deals are costly. You lose money, waste time or even suffer damage to your professional reputation.

That’s why written contracts are essential. Presenting a contract to vendors and clients isn’t a sign of aggression. It’s the mark of a professional. When you clearly outline project scope, payment terms, responsibilities of the parties, etc., you’re ensuring that both your interests and the other party’s interests are protected.

Business Mistake #3: Thinking Your Product Or Service Sells Itself

You know in your soul you have a revolutionary product or service. So you set up shop and wait for the customers to line up. Or you build a website and watch for the orders to start pouring in. But all you hear is crickets.

You need a marketing plan—a way to reach your customer, let him know you exist and share how your business will make his life better.

Business Mistake #4: Not Knowing Your Client

As you start marketing, don’t fall into the trap of thinking you can be everything to everyone. If you want your promotions to be truly effective, you need to know exactly who you’re talking to.

Who specifically is the ideal user of your product or service? Equally important, who should not use your business? Good marketing attracts the right prospects while simultaneously repelling the wrong ones.

When it comes to your target audience, the more specific you can get, the better. Identify key information like your target’s gender, age, income, level of education, pain points and more.

Business Mistake #5: Confusing Revenue With Profits

If money is landing in one hand while more is consistently going out of the other, you don’t have a successful business. And watching your revenue without considering your expenses is dangerous.

Instead, always keep an eye on what’s generating the most profits. Though one particular client may bring in the most revenue, do they actually cost the most? Other clients might be giving you a better return per unit or per hour of your time. Focus your energies on retaining those profitable clients and attracting others like them.

Business Mistake #6: Slashing Your Prices

As a small business owner, you’re never going to be able to compete on cost and win. There will always be other people who will have large-scale efficiencies—or a lower standard of excellence—that will allow them to beat you on price.

Instead of tanking your profits by undervaluing your business offerings, focus on providing value. That value could take the form of a superior product, highly personalized attention, a unique package of services, ease of transaction and more.

Business Mistake #7: Staying A One-Man Show

Most small business owners wait too long to make their first hire. They think they’re saving money by not paying for the expense of an employee or contractor. In reality, though, they find themselves stuck doing low-valued tasks during a time when they should be  tackling high-valued activities.

Periodically, step back and assess your daily tasks and those of your team. Now might be the perfect time to consider hiring help.

Business Mistake #8: Being Lax With Bookkeeping

Bad accounting means trouble. You lose track of money due to you, miss out on business deductions and run the risk of tax problems with the government.

So set up good systems from the start. There are a number of online services, desktop programs and mobile apps that make invoicing and expense tracking straightforward for budding businesses. If you’re still struggling though, one of the first hires you make should be a bookkeeper or accountant to manage your business finances.

Business Mistake #9: Botching A Customer Interaction

Invariably, you’ll face a customer service fail. A delivery will get lost, a deadline will be missed or something major will fall through the cracks. And you’ll have on your hands a seriously unhappy customer.

This is the time to show what sets you apart as a business. Go above and beyond to repair the problem. Overnight the missing goods on your dime. Fast-track a service and offer the next one for free. And don’t be afraid to apologize sincerely. An extraordinary effort to repair a mistake can sometimes be the most powerful thing in creating devoted fans of your business.

Business Mistake #10: Losing Your Perspective

Your business is your baby. So, naturally, you think that it’s the most incredible thing ever. And that position can make it very difficult for you to see if something is wrong—a set of unnecessary expenses, a bad hire or even the wrong service you’re offering.

So surround yourself with honest people. Team members who are willing to be candid with their impressions and peers who will give you fair assessments of your business. Additionally, be sure to ask for feedback from your customers. Be particular about asking what they didn’t like, what pain points they encountered while working with you, etc.

And stay in touch with what’s happening in your industry. You’ll have a wider perspective if you see what your competitors are doing and what’s bringing them success.

image credit: Bigstock/Mangostar

Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.

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