2053: [Part 1] 8 Small Business Mistakes to Avoid by Philip Taylor of PTMoney on Improving Your Business

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[00:01:00] This is Optimal Work Daily. 8 Small Business Mistakes to Avoid. Part 1 by Philip Taylor of PTMoney.com. When you're running your own business, it's easy to get lost in the weeds and miss some of the small business mistakes you're making. Today, I'll share some of the mistakes that I've made in my small business over the years, plus mistakes that my podcast guests have shared with me. You can learn from our mistakes and avoid making the same ones so your small business can thrive.

[00:01:30] Caution. I'm still a work in progress myself, so I'm probably still making many of these mistakes. 1. Being cheap. One of my biggest small business mistakes. When you're not making any money with your upstart business, it makes sense to pinch your pennies and go the cheap route. Somewhere along the way, though, you start making money. The problem arises when you never use that earned money to reinvest into the business. I'm still cheap in a lot of ways, but I ask myself the question,

[00:01:57] Could I be spending money on my business that would propel me to greater heights? You should be stopping to ask that, too. 2. Borrowing money before your first sale. Without funding, some businesses would never go from good to great. It's true that financing can take a business to the next level, but I would really question any business that's looking to generate its first sale by using debt. If the product or service is needed, then you should have a paying customer,

[00:02:24] or at least have the promise of a paying customer before you go into major debt. Look no further than the crowdfunding of the Pebble Watch to find an example. 3. Co-mingling your finances. One of the best things you can do for your maturing business's finances is to open up a separate bank account. It's fine to co-mingle business funds when it's just coming out of the hobby phase, but there are many reasons to go separate once you get serious.

[00:02:50] The obvious reason is taxes. It makes filing a heck of a lot easier. But I think the more important reason is so that you can get an isolated picture of your finances, so you can start improving your business. 4. Hyper-focusing on sales. The business owner that says they had $1 million in sales last year sounds pretty impressive, until they tell you that they also had $1.1 million in expenses. Quote, full of sound and fury, signifying nothing. End quote.

[00:03:20] Macbeth by William Shakespeare. As a business owner, you should focus on profit. In other words, the bottom line, not just sales. This means you need to review and reduce your expenses. You also need to analyze your profit margin and attempt to find the right price point for your product or service. Appropriately, my friend in sales, David, contributed this point. 5. Not setting goals. Quite often, we entrepreneurs fall into our business ideas because of our passion or latest interest.

[00:03:49] Setting goals for the business, at least initially, may not have come to mind. And goals can sometimes be the antithesis of a good business idea. Goals get in the way initially. But at some point, you're going to need to start treating your business like a business, and provide a framework for your creativity and ingenuity to exist within. Make sure your goals are smart. And break your goals down into phases and tasks that can go on a calendar so you actually make time to accomplish them.

[00:04:17] 6. Building a glorified job for yourself. Be honest with yourself. Is your business just a glorified job? Meaning, did you create something that has you acting like an employee versus an owner? Do you have freedom, creative license? And are you building your brand? I am so proud of having left the corporate world and having started my own gig. But I still have to do certain things every day or week that keep me from being truly free from my business.

[00:04:43] Not that I want to escape my business, but I still need to be able to if I want to. That's the difference. I'm still a work in progress in this area. How about you? 7. Assuming you can't do something. You're a business owner because you are willing to take a risk, no matter how small. That attitude should extend to all parts of your business. Never assume you can't do something. I'm not talking about not outsourcing or trying to do it all.

[00:05:09] I'm talking about not limiting yourself to do more and more with your business. Want to revolutionize your industry? Go do it. Want to be the first to offer something? Make it happen. And 8. Doing something illegal. The biggest mistake. Doing something illegal is probably a business mistake you want to avoid at all costs. Before you start a business or side hustle, doing the proper research can help you avoid investing your time and money into a venture that isn't even legal.

[00:05:38] That's what happened to Michael Pruiser. Here's his cautionary tale of starting a small business that turned into a legal nightmare. Hear that in tomorrow's episode. You just listened to part 1 of the post titled, 8 Small Business Mistakes to Avoid. By Philip Taylor of PTMoney.com. Ready to soundtrack your summer?

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[00:06:58] And thanks so much to Philip for a great start to this post. Philip is a CPA, blogger, podcaster, husband, and father of three. He's also the founder of the personal finance industry conference and trade show FinCon, which we have attended multiple times. And needless to say, because of Philip's expertise, you're going to hear a lot from him on Optimal Finance Daily as well, one of the other shows. In our network.

[00:07:21] So be sure to check that show out if you haven't done so yet, for much more from PT as well as many other fantastic blogs about personal finance. Thank you so much for joining today. And of course, please join me again tomorrow where I'm going to read the second half of this post and where your optimal life awaits.