The Top 4 Mistakes You Should Avoid Entrepreneur Articles By Harish Amilineni
In business, mistakes are made, but there are a few common pitfalls that you can avoid by doing your homework. Just like those days back in 3rd grade when you were learning cursive, you need to keep your head up and move past mistakes. You can start over or you can move forward, doing things in the correct manner. The most important thing is that you learn from these errors and use them as tools that you’ve gained along the way. These experiences will help you continue to build a solid path to your future success in business.
The following is a list of the most common mistakes that businesses make. This knowledge will allow you to not go down the same road as others before you.
Poor record keeping
Records are not just obsolete forms of music media; they are an important method for you to keep track of your company’s results and funds. Keep meticulous records for yourself, your lender, and your favorite friend, the IRS. They should be clear and organized, not a mishmash of scattered documentation, or something you feel compelled to do on a sporadic basis. Be up to date with your financial statements and you will greatly benefit from these efforts. If you intend to keep good financial records, the only way to do it is to develop good recordkeeping habits from the very beginning. In all likelihood, if you start off with bad habits, you’ll never get back on track. If the mere thought of numbers makes you cringe, the answer is simple; seek a third party to assist you in your needs.
Failure to seek outside help.
Many businesses are reluctant to hire third party help. But, nearly every small business owner will need the assistance of an accountant, attorney, banker, and insurance agent at one time or another. Some also hire consultants to help with their strategic planning and sales and marketing. In fact, if you decide that you do need the help of a professional, finding a good one should be one of the very first steps you take to start your new business. Some of the first steps you’ll be taking – deciding on the form of your business, for example – will be easier if you already have professionals lined up. Once your company’s needs have been assessed, the next step is to locate a professional. A good place to start your search is in your own home. If you have an accountant, lawyer, insurance agent, or other professional who handles your personal matters, chances are they will be happy to handle your business matters, or at least provide a reference to someone who will. If you don’t have a professional who handles your personal matters, seek referrals from friends and relatives.
Poor financial management
Every business needs money on a daily basis just to keep it functioning properly, and yours is no exception. Make sure you are aware of the needs of your company, but be cautious not to over inflate the number needed, or conversely try to operate on something less than a shoestring budget. Gather data from your hard assets list, your budget, gross profits, fixed and variable expenses, and interest expenses associated with your loans. The more bases you cover in terms of gathering a comprehensive list of expenses, the better picture you will have of what your actual expenses are.
Don’t let a down cycle become a free fall into financial disaster, take charge and be proactive. At the first sign of a problem, it is best to consult with a financial advisor or accountant. They will be the key player on your team, one who will help you determine the root of the problem. Finding the source of the problem is the first and vitally important step in addressing and fixing the problem. Often, common “fixes” involve obtaining a loan or finding another method of raising capital. The last thing you want to do is hope that things will just work out. Problems don’t disappear when you bury your head in the sand; they only grow and eventually bury you completely. Finally, don’t make the mistake of keeping your investor/lender in the dark about the situation. Withholding such information will only create another problem and place your integrity in jeopardy.
Not informed about the business
Being informed in all areas of your company will keep you ahead in life, in business, and in your employee’s esteem. Don’t be completely dependent on an accountant or business advisor to handle all the financial aspects of the business. Pushing aside all those financial matters, not paying attention to the details, and relying completely on another party is a recipe for disaster. The most successful companies are those whose leaders know what is going on with all facets of their business. Get into the habit of asking questions and making the effort to understand the financial aspects of your business.
Making mistakes is a part of life, one we can benefit from if we learn from those mistakes. However, learning from someone else’s mistakes can be an even better option. Take the advice outlined above and utilize the experience of those who have gone before you. Never make the assumption that you are automatically exempt from certain situations or think that it could never happen to you. That is the thought process of a fool, not the strategic thinking of a successful leader.
Aaron Dyer is President of Dyer Consulting Group, a firm that works with start-ups and small businesses who want to increase the value of their company. He helps them focus on ways to grow their business through better strategic planning and financial management, which have led to higher revenues and greater profitability for his clients. Aaron brings over 12 years of proven financial, business development, strategic planning, sales and marketing, and management expertise to his clients. His passion for helping companies improve their operations and create value compelled him to found Dyer Consulting Group.