6 Common Mistakes New and Existing Business Owners Make


This is pretty straightforward stuff with nothing really to break down - new business owners need to understand common pitfalls and flawed thinking of being in business for themselves, while current and even successful business owners can learn and grow as well, by learning what to avoid, from the mistakes of others. So let's jump right into 6 of the Most Common Mistakes both New and Existing Business Owners Make, and hopefully not all at once.


1 Doing Everything

We get it. You’re in control. You got to where you are by being willing to do anything to get or keep a customer, and so, you’re accustomed to wearing all of the hats. But if you’re over the dishwasher's shoulder when you should be promoting your restaurant, you’re taking it too far. By being the apex predator of your field (at least in the home office!) business owners are often used to taking matters into their own hands. It's known that business owners are often savvy DIYers, believers in the sustainability of the self, and crazy about continuous self-improvement, nothing that can't be learned or accomplished. But an interesting duality of the role of Owner is, not knowing when to give parts of the job away.


I use the following example a ton: payroll, for example, isn’t that hard. Anyone who’s passed 4th grade math and can use Google at a beginner level can do payroll and execute on the appropriate actions and so forth . .yet payroll solutions are super affordable and way too automated to pass up. So why do so many business owner who aren’t good at long division (don’t forget to carry the 9!) stressing themselves out and spending 4 hours per week to pay their small team when they could offboard this for about a hundred dollars a month? To put it in contrast - why would a doctor be managing her state sales taxes and setting aside social security when she could be performing more lucrative surgeries. In addition, you get what you pay for! If you dare buy that at-home self-serve acupuncture kit you’ll see why it’s best left in the hand of a professional acupuncturist (this is hopefully NOT a thing, it’s just the best example that came to mind!). Evaluate what your time is best spent doing - probably your business - and be willing to offboard some items to professionals.

2 Paying Too Much for Certain Services

There's another side to that coin however. Some business owners are entrenched with certain providers and afraid to break eggs to make an omelet, essentially overpaying for whatever reason and refusing to cancel when there's an adequate provider at a far better rate. Payroll, like we looked at before, makes for a good example again here: I’ve encountered people that pay a CPA $150 monthly for tax reporting that can be done automatically, simply because they won’t try something new. I’ve watched regret-avoidance framework cause some business owners to become way over-insured (we believe in being extremely well-insured! But this is a “thing”) or haven’t at least compared their monthly premiums with the competitor. I’ve watched business owners shell out thousands for tax preparation, yet, some small business tax preparation just isn't that complex and could be done by the Owner with some elbow grease and sweat equity. Another example is paying for software when free trials are available from many providers, based how you’re going to use it. Business internet, in yet another example, is crazy expensive and some could do without it.


Part and parcel with paying too much - is not taking advantage of business discounts that come simply by providing your business information (some cell phone plans, some insurance bundles and even Wayfair, for example, offer discounts to business owners). As far as not knowing what to pay for. . .with any business there is some amount of trial and error, so, simply ensure you don’t get locked into contracts that are expensive to break, as this falls right back into the theme. Keep a close eye on your expenses – ever dollar you save, especially starting out, is one less you have to go earn. Careful – take some of the above too far however, and you’ll be back to problem 1. . .


3 Not Taking a Day (or some kind of time) Off

For 12 customer-facing years, consulting business owners, I’ve watched time management be an absolute wrecking ball for those that don’t get a handle on it. Having a moment or two each day, and some sort of time set aside each week, to reflect and refresh, is paramount to the strategic growth of your company, as well as for personal growth. You need fresh air, and your legs have been screaming at you to get up and stretch them since you sat down this morning. And don’t think you can upsize your business if your body is breaking down – success and sickness don’t go together. You need personal time - and people who can’t create it 1) can’t zoom out, 2) can’t see to think strategically or 3) can't so much as catch their breath.


In a 15 year career in consumer and small business banking, I watched business owners struggle to give their business the rise they needed to feel as though they were finally able to take a day off, while simultaneously tanking their relationships with others or their children. The grind is critical, and hustle is a must-have, make no mistake, but simply sitting in the office from 6p – 8p each night waiting for the phone to ring is a great way to 1) confirm that this is when people are eating dinner and are absolutely not going to call you, and 2) also a surefire way to miss every soccer game your kid is going to play in. Health issues and mental health issues number amongst the additional reasons you need to consider what your personal time needs to look like and when it should take place. Maybe you do need to work all seven days but perhaps you need to at least send yourself home an hour earlier each night.



4 Making the Wrong Hire

In my years managing people, hiring and having to fire, I learned many key lessons but none stand out to me about the process more than this truth: Desperate people find other desperate people. The urgency to hire swiftly often comes down to either not having invested in a network that can bring you an employee when you need one, or, failing to offer the correct (appropriate for the field) incentives to land the best candidate, both of which are completely within the business owner's ability to control to manage appropriately. How should a business owner prepare? During the interview - ask about their relationship with a prior manager, or how the last position ended if not currently employed. Any inability, on their part, to articulate what exactly happened in a positive way should be a red flag. Also - check references!! This can’t be stressed enough, yet, unfortunately not enough Owners actually make the call and ask the legal questions that they are able to – trust me, if someone’s a dynamite employee the person picking up the phone to answer your call is going to pay them a compliment, and if the candidate is hot garbage, listen closely - they could be trying to clue you in.


Turnover is a real concern and you’ve got to stay up on your industry to know what type of employee you may be hiring. You absolutely must hire for diversity and diversity of thought, you’ve got to pin down what type of personality it will take not just to work well with ownership but for your customer, maybe more importantly! You've got to be able to answer some existential questions when you hire, such as: who do your clients want to interact with, and, are they an extension of the ethics, integrity and vision that you have when you lay it all out. Make sure you understand the candidate’s 1, 3 and 5 year plan even if you ask it indirectly, so that you can strategically plan for their departure. Because worst-case scenario – you have to part ways with this person you just welcomed to the team and now it’s a legal issue. Protect yourself by taking notes throughout the hiring process, and any time you commend or reprimand an employee.


5 Having the Wrong “Exit Strategy”

This can take on quite a few forms, but just for the sake of conversation here, a few versions of this mistake that business owners make include overvaluing the future sale price of a business, or, believing in a more lucrative transition than is realistic, as well as failure to sell at the best time (the peak of a market for example) instead favoring to sell “when they want to” or “when they are ready.” Also, the “go until the day you die” strategy has a 100% mortality rate. Father Time wins every time someone tries to outlast him, and it’s long since been said that “the check engine light comes on at 40,” so what could that suggest about our more mature business owners of a certain age? No one’s saying you can’t do what you love but health does become a factor at some point, and is horrendously under-prepared for, by and large. This can have a monetary effect of multiples of the annual revenue of the firm, if you know anything about how some small businesses are valued. Other manifestations of this life-altering mistake include holding the belief that one’s entire retirement strategy is wholly wrapped up in their ability to sell their business, which leads poor decisions with money, not creating an adequate safety net, not paying for solid medical, and failing to contribute to IRAs, for example.


6 Failure to Start

This is actually the NUMBER ONE mistake that prospective/potential/future business owners make! Not going into business. At all. Look, there are right ways and wrong ways to do it and you need many things to leave your day job, not the least of which includes a great idea, a solid plan, some financial solvency and wicked confidence (or at least the ability to overcome adversity!). But that doesn’t mean you need to be “in the planning stages” for 4 decades. If it’s a hobby, do it already, if it’s a craft, nothing stops you. Moreover - if you have a killer business idea and you know there’s a market for it, you need to get help to get out of your own way. Talk to a business banker, speak with the community college Entrepreneurship Professor, go to a SCORE Counselor, shoot, go to Reddit already, or essentially anywhere on the web and get some feedback on it. Work at it on the side until you’re able to transition. But don't do nothing - you've already tried that and it's gotten you to right where you left off which is nowhere.


Conclusion

It's fine if you need to learn by doing rather than taking the trusted advise of those who came before you. Disregard this post's advice at your own risk. Moreover, this obviously isn't a comprehensive list, and there could be potentially hundreds of mistakes or pitfalls that anyone can make, not the least of which are our business owners. Be sure, however, you don't make the 6th mistake(!) by stopping yourself before you've even started. Before you rise to achieve your dreams and the way of life you know is possible, you have to launch!


- Matt Holmes


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