10 fatal mistakes of entrepreneurs
Those who believe that the main thing in business is to start, and then everything will go by itself, are deeply mistaken. A lot of entrepreneurs are forced to close the business after a short time, as the business did not even bring a minimum income.
It’s not so bad 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 enterprise 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 in person!
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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 minimize costs in everything. 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 certainly worth doing 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 other people 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 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 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 the customers will immediately drop me.” Clients may fall out (although this is far from 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, take into account that you will need to pay employees wages, maintain equipment performance (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 were able 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.