10 fatal mistakes entrepreneurs make
Those who believe that the main thing in business is to start, and then everything will go by itself – they are deeply mistaken. Many entrepreneurs are forced to close the business they started after a short time, as the business did not even bring in a minimum income.
It’s not so bad when the enterprise simply does not bring the income that you expected. It is much sadder when, due to the mistakes made by the entrepreneur at the start, the enterprise simply cannot continue to exist.
We have formulated the most common mistakes in business, which are inherent in almost any field of activity. To prevent the failure of your business, you need to know your enemy by sight!
Many aspiring entrepreneurs think that in order for a business to flourish, it is necessary to strive to reduce costs as much as possible in everything. It’s a delusion. You need to be able to correctly prioritize and understand where you can save money, and where such savings can be fatal.
If renting a more expensive space (for an office or for placing equipment for production) will bring any advantages, then you should definitely do it.
Hiring your friends and relatives
When you are just starting your own business, especially if it is the first one, it is always difficult to let strangers into your business and immediately begin to trust them. In this regard, many make a big mistake – they hire their relatives, friends and acquaintances in their company, arguing that “I know these people well, trust them, and they will not let you down.”
In some cases, this strategy may work for you. However, more often it happens otherwise, and after a while you already begin to regret that the accountant in your company is your aunt, and the sales manager is a close friend. First, by prioritizing friends and family as your employees, you are depriving yourself of the opportunity to hire truly professional people who could bring much more value to your business.
Secondly, working together with your loved ones is always a potential enemy for your relationship. And when you act as the boss for your relative or friend, then the danger begins to hang over your business. After all, people with whom you have family or friendly ties are far from always professionals in your business. And pointing out their mistakes, and even more so firing them, is morally difficult.
Purchase of used equipment
Yes, in some areas of activity such a step would be reasonable and justified. However, it’s worth considering carefully – won’t you spend much more money on the repair and maintenance of used equipment than on buying a new one? The well-known English proverb fits here very well: “We are not rich enough to buy cheap things.” Apply this principle wisely to your business as well. And this applies not only to the purchase of used equipment, but also to the purchase of new, but cheap and low-quality equipment.
Having invested a considerable amount in equipment at the start, you will later save more than buying cheap or used equipment. Why? Because it will serve you longer and will not require frequent repairs and replacement of individual parts.
Setting low prices for services or goods
Most often, this is done in pursuit of more customers and they argue like this: “I will put a small price on my services or products, and customers will immediately pour in to me.” Customers may fall down (although this is also far from a fact, since an unreasonably low price raises doubts about the quality of the product), however, with such a strategy, your business risks becoming bankrupt.
When setting a pricing policy, keep in mind that you will need to pay salaries to employees, maintain equipment (repair, replacement), pay rent, etc. Adequately estimate the cost of your product, and consciously underestimate it is the lot of inexperienced and not very smart entrepreneurs.
Refusal of professional services and neglect of consultations
Do not rejoice if you managed to hire an accountant or lawyer who asked for low wages. As a rule, you are unlikely to get professional work from such an employee, and subsequently he will simply “sink” your business. The knowledge and skills possessed by true professionals in their field should be paid accordingly.