You’ve probably heard the phrase ‘fail fast and fail often’, the idea being that you’ll learn a lesson and bounce back stronger each time.
While trial and error can often create new opportunities to grow, there are some mistakes that have the potential to seriously hinder your success.
Here are five mistakes to avoid when running a business.
1. Failing to build a credit history
As your business grows, there’s a good chance you’ll eventually need to borrow money, whether that’s to open a new location, start a new product line or invest in new technology.
Lenders will want to see a record of good borrowing behaviour before they fork out heftier and heftier sums, so you could be out of luck if you wait too long to build your record.
Start early by taking out smaller loans, for example taking out a credit card in your business’ name rather than your name for everyday business expenses.
If you’re the director in a business, you can find out where you stand by accessing your business’ full credit report and score through illion.
2. Neglecting your marketing
You might be able to get along fine focusing solely on your craft, whether that’s brewing beer, designing dresses or painting houses. But if you want to grow, you’ll eventually need to use more than word-of-mouth to spread your name far and wide.
At some point, you’ll most likely have to take marketing seriously. This can involve learning an entirely new set of skills – or at the very least, learning to manage a consultant who does your marketing for you.
You can be assured that your competitors won’t neglect their marketing, so you do so at your own risk.
3. Refusing to delegate
Many business owners do everything themselves at first: the sales, support, marketing, bookkeeping, etc. But after a while, these tasks not only become more complex, they also become more time-consuming.
This means you’ll eventually have to hire someone else to take over certain tasks. It might be difficult to hand the reins over to someone other than yourself, but imagine the alternative: burnout, costly mistakes, or even worse, a failed business.
4. Paying yourself a low salary
It’s tempting to pay yourself a low salary so that you have more capital to inject back into the business. But what happens when life throws up an emergency and you’re tempted to tap into your business accounts to pay for it?
You definitely don’t want that to become a habit, and if the business has trust accounts, this could be illegal as well. So pay yourself the standard rate and keep your personal accounts and business accounts separate from day one.
5. Pricing yourself out of the market
Finding yourself in a price war is a race to the bottom. There’s always someone who is willing to undercut you and would be satisfied with uber-thin margins. But unless you’re pushing tons and tons of product, this strategy is likely to sink you in the long run.
Instead, hold firm on your pricing while doing more to convince your customers it’s worth it. The added value can come from stellar customer service, the superior quality of the product, or the status of belonging to an exclusive club of product owners.
The bottom line
You’re bound to make some mistakes as you build and grow your business, but don’t make more than you have to. Sometimes you can learn from others’ mistakes in a way that lets you reap all the learnings, but suffer fewer of the setbacks.
Disclaimer. The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual or business. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.
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