In Part 1 we covered:
1) Underestimating Project/Service Time
2) Not Knowing Your Company Numbers/Incorrectly Setting Prices
3) Not Charging for All of Your Time & Costs
4) Not Getting Paid Fast Enough
Now let’s cover four more common business mistakes and how to avoid them
5) Failure to Have Solid Systems and Procedures in Place
Too many procedures (known as red tape) is the reason why many people start their own business in the first place. Unfortunately, having no procedures and systems in place at all is not an alternative. Depending on the type of industry, business owners must come to a happy medium or chaos and the unknown will ensue. Some basic examples where procedures or systems are needed include billing, collections, payroll, hr (interviewing, hiring, vacations, benefits, job responsibilities, etc.), manufacturing, operating equipment, maintaining equipment, inventory, sales calls/visits and logistics to name a few.
Even a one person business needs to have some admin procedures in place. This will make it easier to hire temps and subcontractors and control what they are doing for you. Without at least a watered down version of a system or procedure to do everyday work, you will be to blame for causing many major headaches as your company grows. We can’t emphasize how important this is for when you bring on new employees.
6) Spending Advertising Money Just to Say You Advertise
It’s better not advertise then to spend without regard to 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. The other wasteful part of marketing that many people make the mistake of doing, is not tracking their previously successful campaigns. Just because a $400 dollar a month ad worked once very well for one busy season, does not meant it will automatically work every year after.
7) Spreading Yourself Too Thin
This is a classic mistake made by every entrepreneur. The key is to figure out when you are at that ìwearing too many hatsî point and start getting some help. The solution here is to know your strengths and to be able see when you are not performing the duties that demand these skills. If you are the best sales person on the company, you canít get caught up in day-to-day operations. If you do, sales will slip and eventually you wonít have any operations to worry about. Think about this to help you figure out if you are spread too thin: Did you really go into business for yourself to work 80+ hours a week?
8) Not Getting Help Soon Enough
Set goals to know when to hire people to take over where you are light on knowledge. Not getting help or waiting too long can kill a company. Most people who start a business do it because they are good at the technical end or the sales end. If you know the best way to make a widget, then your strength is in production and that is where your time should be spent. Hire an outside company or consultant to take care of the sales and marketing and then hire inside when you can afford someone full time. Donít be something to your company that you are not. It will only hold you back.
The three big issues people like to tackle themselves but usually are least knowledgeable about are legal issues, business finance modeling, accounting and bookkeeping issues and daily operations issues. The odds are that these three things are your weakest link so if you don’t have a partner that has the background for these subjects, then be prepared to get help as soon as possible. It is preferable that you do this before you start a business, or at least identify people who can help you.
Make the time to think about and address all these things on a regular basis. Starting and running a business is hectic and all entrepreneurs and business owners feel like they can not slow down. The fact is that slowing down and thinking about all these things may seem like a step back, but get you three steps ahead in the end.
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