The 5 Most Costly Business Mistakes

Mistakes and Learnings – The Same Side of The Coin

This past week, a client asked me, “what are the most costly business mistakes, people make?” I had never thought of this in terms of a list, but then thought it might be a great idea for this week’s article.

First off, owning a business is simply a license to take risks that likely many people wouldn’t have the opportunity to experience, in a normal work environment. Some things we try work out well and others, end up in the “mistake” pile.

Likely because I have made my own fair share of mistakes, I like to think of them more as the “learning” pile.

That in mind, here is a list the best “learnings” people realize in business, only once they end up making them:

1. Not doing business research – Unfortunately, this is one that can occur during the start up phase of a business, or later on as you add products and services to the mix of your business. It is incredibly easy for a business owner, to hear the voices of a few and jump on an idea, thinking it is something everyone wants or needs. They buy into that new idea and are sure others will as well. But sometimes good ideas, either end up being bad or in the end the owner finds out that it takes way too many resources, or time to get it to scale. A little research, upfront, really can go a long way!
2. Not understanding a business model’s fit – Sometimes in the desire to differentiate oneself, owners grab onto a business model used in one industry and try to apply it in another. Absolutely this can work, but it also depends on the strengths and weaknesses of a company. For example, you might think you can mass sell your products online, but after launching your e-commerce website, you realize people need to be able to touch and feel the product before purchasing.
3. Not having access to enough cash or financing – I solidly believe the best time to access money is when you don’t need it, but this requires you to be planning out far enough to know when you are going to need it. So many times, business owners make the decision to pull the pin on a new idea, or on a new piece of equipment to offset a downturn in the business. At that point, financial institutions are looking at the degrading financial position and get reluctant to give you the money you need to correct it. A little planning can go a long way in ensuring you have access to funding before you ever need it.
4. Not investing in marketing or advertising – There are many great ideas out there to solve most day-to-day problems, however often times so many resources go into the product or service, they forget to plan on how they are going to get their message out there. It doesn’t matter how good your product or service is, if no one knows about it, then there is no one to buy it. Marketing and advertising can take a bit to “catch” in a market, so just because you don’t see an immediate impact does not mean it isn’t working. Consistency is key when it comes to getting your message out there.
5. Trying to do everything themselves – Especially when a business owner first starts out, they try to save money by doing everything on their own. Sure, it saves money but with only so many hours in the day, it also limits the potential for growth in the business. It is important to push out the things you don’t do well or don’t like doing, and then get focused on doing the work, that will make you the money you need to be able to afford to have someone else do it.

It is natural that in building a business, everyone makes mistakes. There is generally no rule book to doing it and there will never be two people who do it the same way. The important thing in making any mistake is to learn from them. Hopefully in looking at these five, you will see yourself, where you can learn something to apply to your own business.