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10 Mistakes Business Owners Make That Lose Money

Photo from personal archive.

Owners of companies often dig so deep into the “OS” that they do not see where they are losing money and make mistakes that hinder their development. Sometimes they do it out of inexperience, and sometimes because of insufficiently developed competencies or simply because they have long lost their systemic vision. Entrepreneur and business coach Nadezhda Mertvishcheva told what you need to pay attention to in order to make your business more efficient.

– When I ask entrepreneurs why they created a business, the word “money” is in different places for everyone. But in fact, business is most often created precisely for the sake of money. If there is no money in business, then it is a hobby or charity. Therefore, if you cut off the level of the mission of your business, then the most important criterion for efficiency is the availability of money for the company and the net profit for the owner.

So where (and why) are we losing money?

1. Failure to delegate

“It’s faster to do it yourself than to explain.”

“They’ll do it wrong anyway.”

“I don’t want to risk quality, so I do everything myself.”

Familiar? Or the other extreme: there is a team, job responsibilities are distributed, but you still cannot let go of control, delve into all the details, do not trust, do not allow the team to take the initiative and take responsibility. In both options, we lose the key: the manager’s precious time and resource, which he must spend on business development and team management. To manage does not mean to delve into all processes. This means getting the result by the hands of employees, organizing their work. The main criterion for the effectiveness of the manager’s work is that the business is growing. If this does not happen, then you are not earning money.

2. Financial illiteracy

In small and micro-companies, you can often see the following picture: expenses are not normally considered, what came to the cash desk is spent on business and yourself, business money and personal finance do not separate, “I don’t know how much I earn.”

Photo from personal archive.

In such businesses, cash gaps are constantly formed, there is always not enough money, and when crises occur and revenues fall, the business runs the risk of becoming bankrupt.

On the one hand, it is obvious that there should be order in finances, but the owner is so busy with current affairs that there is not enough time / effort / motivation to understand finances. A well-designed financial model and financial plan help you prioritize your business, which means you can earn more.

3. Lack of clear goals

Business goals should always be numeric, firm and measurable. “I want to become a market leader” sounds good. But the leader is how? What is the market share? What is the net income there? You can become a market leader, but at the same time earn nothing. Therefore, formulate your goals clearly and specifically. Without this, it is not clear how to measure whether you are effective. You can’t manage what you don’t measure. If you want to make your income manageable, start measuring results and “smart” (write using SMART technology) your goals.

4. Inadequate Goals

Consider two stories of entrepreneurs:

  • Nikolai has been in business for 4 years, he is used to acting quickly and getting everything at once. For a couple of years now, he has set the goal of “Make x10 in a year,” but for some reason he can’t move, the revenue stands still.
  • Eugene is used to growing slowly but steadily. In the plan for the year lays the growth of + 5-10% monthly. For the year makes this plan and grows from year to year.
Photo from personal archive.

And all because inadequate, inflated goals do not cause a desire to do something: our brain saves energy when the goal seems unrealistic to it. Therefore, it is important to set more realistic goals for a shorter period and periodically review them. By setting unrealistic goals, we lose motivation and money.

5. Lack of strategy

I often come across this picture: in business there is a digitized goal, decomposition by products and directions, but there is no strategy of clear steps. Therefore, the actions that we do during the year do not lead to this goal, it remains unattainable. Accordingly, we lose in results and money because of this. If you want to reach your goal, start with a clear strategy for 6-12 months.

6. Wrong people on the team

Sometimes we lose a lot of money because of the wrong people on the team.

I had experience working with the wrong person. For three years I deceived myself and raised him to the head of the direction, invested money and time in his education. As a result, the person turned out to be insufficiently competent, and after three years I nevertheless fired him. At the same time, for another year, I continued to pay fines due to the mistakes of this employee.

Therefore, if it seems to you that something is wrong with an employee – he does the work of poor quality and constantly comes up with excuses, is in the position of a “victim” – it doesn’t seem to you! In the end, you still will not work with this person. Therefore, you do not need to wait and tolerate incompetence – it will cost you too much.

7. Wrong priority in business

In the matter of priority, we often fall into the trap of thinking: we think that we have the “right” priority, but all our actions say otherwise. For example, we want to sign up for a gym and read a lot of different articles about healthy lifestyles, maybe even buy a subscription, but we don’t go there. At the same time, it seems to us that our health is a priority, but sometimes actions are replaced by thoughts about health. It is better to honestly admit to ourselves that this area is simply not a priority for us at the moment.

Photo from personal archive.

Also in business. It seems to us that we are engaged in the development of the company, and day after day we do nothing but clean things up, put out fires, and do absolutely nothing for growth. The true priority is what our days are filled with. Accordingly, if we want the business to grow and develop, it is important to take actions from the “For Development” list. If they are not done, then every day we lose money.

8. Entrepreneurial beliefs

Sometimes we ourselves, with our beliefs and attitudes, limit the growth of a business. For example, I worked with an entrepreneur who believed that employees should “pay a lot”, otherwise everyone would leave her and no one would want to work for her. As a result, the payroll went through the roof, and the profitability was so low that the motivation to conduct such a business was zero.

9. Give up quickly

Sometimes we lose money when we wait for quick results and don’t give ourselves time to test our hypotheses. For example, we launch a trial product, invest a lot of money in advertising, and close the project almost immediately without getting a quick response. Thus, we lose the invested budgets and do not earn on a new product. In business, it is important to constantly test hypotheses for mvp (minimum viable product) and allocate budgets for these tests.

Photo from personal archive.

10. Go the hard way

There is a type of entrepreneur – fighters who are used to achieving goals through overcoming difficulties. They like to act “weakly”, any obstacle for them turns into a business task. In general, this is a good strategy for business, but not all problems need to be solved through discipline and overcoming. In business, it is important to think in terms of efficiency and always look for the fastest, easiest solutions.

Sometimes the goal can be reached in a less expensive way. For example, drain 200 thousand for a target and not attract new customers to work. Or go to a conference and find a new major customer there. The second example is about an easier and “cheaper” way to the goal.

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My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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