No matter how great you are at your craft, small business owner and freelancers are all prone to making mistakes when it comes to business. If you’re making one of these basic mistakes, here’s how to improve moving forward.
Mistake #1: Not Supporting your Small Business team.
I recently heard Mario Batali explain on a TV show how when he first opened his restaurants, he wanted 100% of the focus to be on the customer’s satisfaction. Over the years, he has learned that keeping his workers satisfied was just as important. He has since changed his focus to devote half of that attention to both customer and worker retention. He wants the people who work for him to be happy and see longevity in their role at the company.
Online Business Expert & Web Designer Liz Theresa of Liz Theresa.com would agree wholeheartedly and believes “it’s a mistake not to love the crap out of your team members.” She explains that a successful business owner eventually realizes that a strong team is the foundation of a strong business.
She also thinks that the business owner should continually keep their team members happy. She goes on to say that happier teams tend to be more productive, more loyal, and will care about your clients as much as you do. She also thinks we should thank people that have helped us with our business along the way.
Mistake #2: Keeping the focus on yourself.
While it’s fun to take photos of yourself on a personal social media account, a myriad of selfies could actually turn people away from your business unless you’re a model or someone who’s business thrives on personal photos. Tracie Fobes knows a thing or two about social media since growing her fan base of Facebook followers to over 600,000 for her Penny Pinchin’ Mom website.
She thinks some of the biggest mistakes people make when using social media is overly focusing on themselves. “They use it as a self-promotion platform, when they need to share the content that will make their followers want to engage with them as an expert in their field.” Consider making this switch to better serve your audience and save the selfies for close friends and family.
Mistake #3: Not saving money for Uncle Sam.
Erin Lowry, author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together believes that many newbie freelancers don’t remember (or don’t know how) to save for taxes! The cure: She recommends putting 40% aside from each paycheck for taxes. The purpose for this is two fold. “Most people recommend 30%, but I like 40% because that’s also automatic preparation for retirement savings. You can put the remainder into a SEP IRA.” She also suggests saving receipts and tracking your business expenses regularly. “It isn’t a nightmare to try and go back and reflect on when and where you spent money.”
Popular podcaster and website owner at CoupleMoney.com Elle Martinez couldn’t agree more and makes it a habit to track expenses on a weekly basis. She explains how finding a set time each week for administrative tasks such as reviewing income, expenses, receipts, etc. has been really helpful to stay organized financially. She points out that she used to procrastinate and then struggle at the end of each month remembering all the relevant expenses. Martinez says, “Now it’s just an hour once a week and I feel less stressed at tax time.”
Mistake #4: Forgetting about retirement planning.
President and Wealth Advisor Peter Huminski of Thorium Wealth explains how many freelancers and small business owners overlook retirement planning. “Just because you do not have a traditional 9-5 job with full benefits does not mean you should ignore your retirement plans.” He explains that time and consistency can work to your advantage for a successful retirement plan.
The sooner you start planning, the less you will have to contribute in the long run to reach your retirement goals. He adds that there is also a tax benefit to proper retirement planning. Choosing the right strategy is key. Whether you go with a 401K, defined benefit, IRA, Roth IRA can make all the difference and can lead to a substantial tax savings.
Mistake #5: Not outsourcing.
Maybe you feel proud to be an exemplary business owner that wears many hats. Perhaps you advertise, close deals, promote your business, attend conferences, carry out the actual service while also handling administrative tasks. Accountant and Entrepreneur Eric Nisall explains, “While it seems cheaper to try to do everything yourself or it makes you feel like more of a boss, it’s actually is very costly.”
He adds that you may not only lose profit, but you are most likely wasting precious time that you can never get back, but you lose out on the ability to do what actually brings in the money. In many cases, taking the time saved by outsourcing to create income will result in bringing more than what was paid out to the experts.
Mistake #6: Not recording a profit and loss statement.
Financial Planner and Forbes Contributor Neal Frankle of WealthPilgrim.com often notices two big mistakes freelancers and small business owners make in running their business. The first one he points out is that they don’t know whether or not their business is profitable. They neglect to run a real profit and loss statement. This captures the revenue, costs and expenses each quarter to see what’s going on with the life blood of your business. Doing this allows you to determine if your business is profitable. Be sure to create a profit and loss statement.
Mistake #7: They don’t know what they earn per hour.
Along with a lack of properly tracking the finances, Frankle says that not knowing your rate is a problem. “This can also lead them to running an unprofitable business for too long which can result in them accumulating debts that are very hard to pay off.”
Also, time tracking is key to know how much time you’re spending on your work. Figuring this out will better help you set your rate, cut back on any time wasters or help you figure out how to work more efficiently.
The Bottom Line
These common mistakes can mess up your best efforts and possibly tank your business. Use these smart suggestions to avoid headaches and save you time and money.