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Top 5 Mistakes Small Businesses Make

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Running a business is much more difficult than most people think.  There is a veritable minefield of mistakes and dangers that any business owner must learn to navigate–usually through trial and error.  To try to help you avoid some of the larger and more painful traps, we developed this report on the Top 5 Mistakes Small Businesses Make:

 

1)  Undercapitalization.

The worst mistake small businesses make is being undercapitalized.  If you don’t have enough capital, the chances of your business growing are slim.  You will need to figure out how to keep vendors at bay, how to find small ways to improve your cash flow, how to get financing from non-traditional sources, and be comfortable asking employees and vendors to wait for payment.  It’s not a pleasant situation to be in, so you should do everything you can to raise the capital you need to operate your business.  Don’t be afraid to give up ownership in your company in exchange for capital.

2) Mis-managing Marketing.

The second mistake small businesses make is mis-managing their marketing efforts.  Are you utilizing all seven of the Must-Use marketing tools?  Are you focusing your advertising on distinguishing your business from the competition?  What are you doing to change the market’s buying criteria to make it harder for your competition to take your customers?  If you aren’t making use of all of these concepts, you need to read this article about marketing strategy.

3) Failing to Delegate.

One of the top mistakes is the small business owner “trying to do it all.”  It’s understandable that everyone in your business pitches in to do whatever is necessary.  But even though you and your employees are eager to do it all yourselves, you need to know when you’re in over your head. Don’t be afraid to outsource tasks that your team can’t handle. Make sure that every task is being handled by someone who knows what they are doing. No matter how hard you try, you cannot turn an IT expert into a good salesperson.  A business coach with experience can help you manage the process of delegating tasks and focusing on the most important issues.  You can get free hours of business consulting with an OnRetainer Plan.

4) Not having a business plan.

Even if you’re not looking for startup capital, you MUST have a fully-developed business plan. A good business plan will help keep you focused.  It needs to lay out all the traditional components of a business plan, including a discussion of the competition and of your products, but it needs to have an updated description of how you are going to attack the problems in your business and how you will grow market share and profitability over time. The best entrepreneurs keep their Plan up to date, and refer to it often to help keep their eye on the ball.

5) Making Major Legal Mistakes.

The fifth mistake small businesses make is not hiring an attorney when needed.  Knowing when to get an attorney’s advice can make or break your company.  We have seen countless examples when an owner drafted a contract himself, thinking he saved $1000 in attorneys’ fees, only to learn that the poorly drafted agreement resulted in litigation that cost the company $150,000 or more.  The best way to avoid this mistake is to get an attorney on retainer so that you can call him or her any time you have a question.  Usually, attorneys will advise you whether you need to have an attorney look over a certain document.  The OnRetainer plans, for example, give you unlimited consultations to help you determine when you need to bring a lawyer in and when you don’t.


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