6 Mistakes No Business Can Afford to Make

Karleia Steiner

February 09, 2015

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Building a business really takes hard work. One misstep can be costly to you as a business owner, but being prepared can help you avoid some of the most costly business mistakes. Business owners can sustain their businesses if these costly mistakes are avoided. Here are 6 mistakes no business can afford to make, courtesy of 20/20 NDT Inc.

Funding before clients

One of the most common mistakes you can make is to pursue funding before there are any clients. This puts the business in a precarious position of possibly being in debt. It is recommended that energy be directed toward building a clientele. Having a steady stream of customers actually translates into a much more sustainable business.

Not reading fine print

There are a ton of transactions and contracts conducted as a part of everyday business. Making sure that all of one’s legal ducks are in a row could end up saving you a ton in court fees and hassles. For every contract signed or created, make sure that the agreement’s terms are fair to you. Take an even closer look by carefully reviewing the fine print. Most of the most damaging details are buried in the fine print.

Undercharging is another common issue

Most business owners struggle with setting a correct price. They are often under the impression that they need to lower the price in order to secure business. These low prices affect the cash flow and cut into profits over time. This pricing problem is difficult to correct later on and can potentially affect the company’s bottom line well into the start-up phase.

Failing to have a tax strategy

Most people make the mistake of reviewing the tax strategy retrospectively. If planned proactively with an accountant or consultant, one can avoid paying more in taxes than what is legally required. Being mindful of how every single decision can potentially affect the company’s bottom line can pay off in the long run.

Reviewing numbers

Numbers can be deceiving. On paper, the numbers may very well reflect a profit. Drilling down into the numbers may reflect a much deeper problem. The company may be spending too much in areas like shipping or labor. Costly mistakes that could have been avoided with planning or routine inspections could be indirectly influencing project costs. There may be several areas where costs can be cut in order to increase the company’s bottom line.

Lacking in capital

In order for a business to thrive and remain viable, the business has to have enough capital to run smoothly. Many businesses open their doors and end up failing because the capital is lacking. Financial experts recommend having at least a year’s worth of capital in order to keep their business going in tough times.

Avoiding these common financial mistakes business owners make can improve the bottom line and save the business owner money. Increasing profitability through sound planning and paying attention to costs and tax strategies will help a business thrive in the long run.