5 Mistakes Made By Small Businesses

business mistakes

Making a mistake in the business world is a rite of passage for many small businesses. Acknowledging these mistakes is the first step in correcting them; however you can run into big trouble if you don’t recognize a mistake when you see one.

Here’s 5 common mistakes small businesses make:

Over Hiring

In a small business having unnecessary “fat”, so to speak, can be a death sentence. Hiring too many employees without enough billable work for them to do puts your business in a precarious financial position.

The Solution: Gauge your capacity and only hire when necessary. Don’t hire for possible work but only work that has been officiated by your client or customer with their signature. Not sure your current overload is going justify hiring a new employee? Get an intern. Using an intern is a great way to see how productive a person is before bringing them on full-time.

Cheap Equipment

Cutting costs in the beginning of a business can cut production down the road. Finding the best deal and getting input from employees is valuable, since they will be using any equipment you invest in. Backing up your pictures for a digital marketing company is one thing you shouldn’t do “on the cheap”. Storing backup data online can make sense for some things, but in this case, using more expensive and failsafe external hard drives are necessary and important if you want to avoid disaster in the future.

Solution:  Talk to your employees. Find out what is safe, comfortable for them, and makes them feel most effective in their role. It is likely that what they are happy with is going to have a positive impact on production.

Bad Location

Although the Internet has really changed the way we think of “location”, it still is an important factor for your business. One of the bigger reasons that a bad location is detrimental to a business is that if your location is not a “hub” for the type of business you are in, you may have difficulty finding and attracting people with the experience and skills your business needs.

The Solution: Research the type of service or product you are selling. Keep in mind that staying close to home could be the beginning and the end of your small business.

Non-Necessary Space

This could be the number one problem for some small businesses that expand too quickly. Too much space is not a bad thing; but fluctuations in the business cycle could leave a hefty rent really cutting into the bottom line.

Solution- Wait until your company has outgrown your current space but don’t expand prior until your space is nearly bursting at the seams – so long as it doesn’t have an impact on production.

Not Adapting The Plan

As the business world is ever changing, you business plan should be built to adapt to those changes. Oftentimes business owners are not willing to adapt their vision in the midst of industry changes. Although persistence is a great trait to have for a small business owner, if it means you are stubborn or blind to changes in your industry, it will hurt your business in the long run.

Solution: Company strategy should allow for flexibility to compete in the market. The best advice for any small business owner is to change your perspective. Stop looking at your business as YOUR BUSINESS.

Step outside of yourself for a minute. Ask yourself the questions that you would ask another business owner if you wanted to gauge the strength of their strategy. If the strategy does not stand up to the test, then you may be making one of these 5 mistakes without even realizing it.

What business mistakes have you made? Would you share your experiences?

Photo credit: opensourceway


Tommy Wyher is from Tampa, Florida and works at Copypress writing on their blog and just being a Swiss army knife of production in all areas for them.

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  1. Brad, what is an ideal percentage that payroll should represent of your gross revenues to be a healthy service provider to help prevent over hiring?

    • I recommend that your payroll (including owner salary) not exceed 50% of service revenues as a starting guideline. This may vary depending on your service gross margin and other overhead items — but it’s a good rule of thumb.

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