10 fatal mistakes of entrepreneurs
Those who believe that in business the most important thing is to start, and then everything goes on by itself – they are deeply mistaken. Many businessmen are forced to close the started business in a short time, since the business did not bring even the minimum income.
Another half the trouble when the company simply does not bring the income that you expected. It is much sadder when, due to mistakes made by the entrepreneur at the start, the company simply cannot continue to exist.
We have formulated the most common mistakes in business that are inherent in almost any field of activity. To prevent the failure of your business, you need to know your enemy by sight!
1. The desire to rent a room at the lowest price.
Many aspiring entrepreneurs think that in order for a business to flourish, it is necessary to strive to reduce costs as much as possible. It’s a delusion. You need to be able to correctly prioritize and understand where you can save, and where such savings can be fatal.
If renting more expensive premises (for an office or for placing equipment for production) will bring any advantages, then you should definitely do it.
2. Hiring your friends and relatives.
When you first start your own business, especially if it is the first, it is always difficult to let strangers into your business and immediately start trusting them. In this regard, many make a big mistake – they hire their relatives, friends and acquaintances to work in their company, arguing that “I know these people well, trust them, and they will not let them 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 giving preference to friends and relatives as your employees, you are depriving yourself of the opportunity to hire really 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 a boss for your relative or friend, the danger begins to hang over your business. After all, people with whom you have kinship or friendships are not always professionals in your business. And it is morally difficult to point them to mistakes, and even less to dismiss them.
3. Purchase of used equipment.
Yes, in some areas such a step will be reasonable and justified. However, it is worthwhile to think well – and will you not spend much more money on the repair and maintenance of used equipment than on buying new ones? This well-known English proverb goes: “We are not rich enough to buy cheap things.” Use this principle wisely in your business. And this concerns not only the purchase of used equipment, but also the purchase of new, but cheap and low-quality equipment.
Having invested a considerable amount of equipment at the start, you will subsequently save more than by buying cheap or used equipment. Why? Because it will serve you longer and will not require frequent repair and replacement of individual parts.
4. The establishment of low prices for services or goods.
Most often, this is done in pursuit of a large number of customers and reason like this: “I will put a small price on my services or products, and customers will immediately tumble down to me.” Customers may even fail (although this is far from a fact, as the unreasonably low price raises doubts about the quality of the goods), however, with such a strategy, your business risks becoming bankrupt.
When setting pricing policies, consider the fact that you will need to pay wages to employees, maintain equipment operability (repairs, replacement), pay rent, etc. Adequately assess the value of your product, and deliberately understate it – the lot of inexperienced and not very smart entrepreneurs.
5. Refusal of services of professionals and neglect of consultations.
Do not rejoice if you were able to hire an accountant or a lawyer who requested low wages. As a rule, you are unlikely to wait for professional work from such an employee, and subsequently he will simply “sink” your business. The knowledge and skills possessed by true professionals should be paid accordingly.
Also, if you need a one-time consultation on a business issue from an expert, it is better to use it if you feel that you are not able to solve the problem yourself. Yes, such consultations can be expensive, but they can be a decisive moment in the success or failure of your business.
6. Denial of any credit.
This question is quite controversial. With regard to loans, a large number can be cited both for and against.