10 fatal mistakes of entrepreneurs
The desire to rent a room at the lowest price
Many start-up entrepreneurs think that for the prosperity of the business 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 become fatal.
If renting a more expensive room (for an office or for placing equipment for production) will bring any advantages, then it is definitely worth it.
Hiring your friends and relatives
When you just 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 take their relatives, friends and acquaintances to work in their company, arguing that “I know these people well, trust them, and they will not let you down.”
In some cases, such a strategy may work for you. However, it often happens differently, and after a while you begin to regret that the accountant in your company is your aunt, and the sales manager is a close friend. Firstly, by giving preference to friends and relatives as your employees, you are depriving yourself of the opportunity to hire truly professional people who could bring your business much more benefit.
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 friendships are far from always professionals in your business. And to point out errors to them, and even more to dismiss them, is morally difficult.
Purchase of used equipment
Yes, in some areas of activity such a step will be reasonable and justified. However, it’s worth it to think carefully – but will you spend much more money on the repair and maintenance of used equipment than on buying new ones? The well-known English proverb fits here very well: “We are not so rich as to buy cheap things.” Use this principle wisely in your business. 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 the equipment at the start, you will subsequently save more than buying cheap or used equipment. Why? Because it will last you longer and will not require frequent repairs and replacement of individual parts.
Setting low prices for services or goods
Most often, they do this in pursuit of a larger number of customers and argue as follows: “I will put a small price on my services or products, and customers will immediately drop me.” Clients may fall out (although this is by no means a fact, since the unreasonably low price raises doubts about the quality of the goods), however, with this strategy your business risks becoming bankrupt.
When establishing a pricing policy, consider that you will need to pay employees wages, maintain equipment (repair, replacement), pay rent, etc. Adequately assess the value of your product, and knowingly underestimating it is the destiny of inexperienced and not very smart entrepreneurs.
Refusal of services of professionals and neglect of consultations
Do not rejoice if you managed to hire an accountant or lawyer who requested a low salary. 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 real professionals in their field should be paid accordingly.
Also, if you require a one-time consultation on a business matter 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.
10 fatal mistakes of entrepreneurs
Denial of any loans
This is a moot point. With regard to loans, a large number of pros and cons can be cited. But imagine this situation: one businessman took a loan for a certain amount of money for two years, and immediately invested it in the business. And another businessman decided to independently accumulate the same amount of money for the same two years. As a result, we get what? The first businessman has already started his business and is actively developing it, gaining customers, establishing contacts with partners and suppliers, etc. And the second businessman will be able to do all this only in two years, and when he enters the market, he will immediately face a serious competitor who has been “in business” for two years now.
Of course, obtaining a loan is associated with certain risks, but there can be no business without risks. The main thing is to analyze them correctly and wisely approach everything that could potentially cause any losses.