When starting a business, you undoubtedly have tons of questions, from hiring employees to the best way to prices goods or services. However, there are 6 common mistakes business owners make that can hurt their sources of income.
Pricing, for example, is a huge way businesses can suffer. Underpriced goods lead to a loss of profit while over-priced goods can drive customers away. So what long-term business goals should you have to avoid these potential mistakes?
Keep reading to learn about the 6 common mistakes business owners make, and what you can do to avoid them.
1. Wrong Perception of Value
As you price your product or service, remember to take the cost of your product and all the profit margin to come up with the price you should advertise. Remember to take into consideration how customers see the price, and what they value your product at.
The best way to do this is to know your customers. Connect with them through surveys to learn where they shop and what they value, along with competitor pricing.
2. Competitor Pricing
As previously mentioned, competitor pricing plays a huge role in how successful you’ll be as a business. Investigate the competition to see how they price similar products before coming up with your own pricing scheme.
3. Employee Wages
Your employees are a reflection of you and your business, so you’ll want to hire the best. However, many people can’t survive on minimum wage, especially with a family to feed.
If you can’t afford to pay employees a fair wage, you can expect high turnover rates. To avoid this, hire a fairly paid small staff until you can afford a larger crew.
4. Have a Plan
When some businesses take flight, they do so without a business plan. This may be from a lack of understanding of how to do so or simply because they’re successful from the get-go. That doesn’t mean a business plan still isn’t a necessity.
A business plan helps your business should you suffer a financial setback, need a loan, or find yourself at a crossroads with other long-term investment goals. This is when you’d defer to your business plan to help come up with your next course of action.
Take, for example, this post, which discusses additional ways businesses can make money on private ownership. A formal business plan is essential for situations such as these.
5. Benefits Plans
In the beginning, you may not be able to afford benefits plans for you and your employees. However, health insurance, retirement, disability, and life insurance plans are something you should offer.
Not only will you keep employees longer, but you’ll save on costs out-of-pocket while reducing your tax liability.
6. Exit Strategy
Not every business owner comes up with an exit strategy as retirement approaches. As a result, business owners may not have invested enough into a retirement portfolio, only to find themselves struggling as retirement approaches.
Work with a financial planner to create a retirement portfolio that works best for you, along with a plan for your business after retirement. Will you sell to a child, colleague, or someone else? Have plans in place for your retirement.
Avoid Mistakes Business Owners Make
Now that you know the most common mistakes business owners make, you can work to avoid them. Come up with a formal business plan, hire employees at a fair wage, and remain aware of competitor pricing at all times. Your business (and customers) will thank you.
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