Here’s an interesting notion: Do you realize that there are mistakes you can make at various stages of your business’ development that can be slowly killing it for months or even years if you don’t watch for them?

Well, these mistakes are real and they don't just affect new businesses. A lot of functioning businesses, including the ones you consider "successful" based on how long they've been around, often make these mistakes and are probably wasting a lot of time and money because of it.

Even though some of these mistakes tend to be aimed more at companies in the service industry, they really do relate to many other businesses. I’ve done my best with the listings below to give examples to prove it.

Underestimating Service/Product Time: This one is huge and it relates to both service companies as well as businesses that sell a product. For service companies, this is critical. If you don’t estimate your time to perform each and every service in your repertoire, you will get burned and there is little you can do about it but bite the bullet and learn from it. The best way to estimate time is to do it once yourself or watch your best employee do the task and then throw in a little fudge factor on top of it. For product companies, time becomes an issue with logistics so be aware!

Not Knowing YOUR Company Numbers/Incorrectly Setting Prices- Notice I emphasized the word "your". It’s a common mistake to use a competitor’s as your pricing gauge without actually knowing why they use those numbers. Think about the nightmare you will get yourself into if you take a competitor’s price, cut it by 10% and then start selling. What if the competition has a bad pricing structure and is barely making money or even losing money?!?! What if your expenses are more than theirs?!?! You can use competitor as a starting point but you can’t base your whole strategy on it.

Every industry has it's own numbers when it comes to cost and expenses and you need to be aware of them when it comes to your business strategies. When you are setting your price-points, you should not be concerned solely with what it costs you for the product. How much your labor and materials cost for a service is only a piece of an hourly rate. Employees cost more than just salary and not every employee is part of your labor cost. All businesses also have the expense of insurance. There are a number of business expenses that need to be accounted for when setting sales prices. Oh, by the way, the big one that many people forget about in their price is the quality factor. There is a lot that needs to be considered in regards to your pricing, such as, "standard product features" or "standard services" as well as job site etiquette or in store services or warranties. In the next paragraph I'll get more into why.

Your Time & Costs; Not Charging for ALL of It - This may seem like a silly thing to say to some but I am sure that most business owners would say that they have given away too much at times. I'm not saying that there is a problem with giving a little extra here and there to show your appreciation. But, that's not what I'm referring to anyway. What concerns me are those that put a lot of quality into their work or products or stores and do not cover the cost for it. For example, you operate a business that provides a certain standard service that your competitor doesn't provide. A business cannot just lowball their price to win a job because they need to have those additional costs covered in their price and they need to tell the customer that their price includes an additional service. Stores undermine themselves, for example, when they put more people on the floor for customer service but don’t charge for it. These things cost you money and when your competitors don’t do them it costs them less money. If you give better service and lowball your prices it will not take long for your competitors to watch you fail.

When running a business you need to know that you are giving your clients products or services that are worth paying for. If you get the chance to explain why your prices are higher, then take that opportunity and do it. When a customer dislikes the fact that your price is higher but includes services that your competitor will charge extra for later, then they are most likely price shopping. You don’t want them as regular customers anyway. Believe me.

Spending Advertising Money Just to Say You Advertise- I would almost rather see my clients not advertise then to spend without regard to tracking the results. A marketing plan is bascially useless if you do not have the proper systems in place to measure how well the campaign is working.. Another wasteful mistake that is frequently made while advertising is not tracking previously successful campaigns. It is beyond me why some business owners think that because a campaign worked once that it will continue to work forever. This discussion is continued in part 2 of the 8 BIG Small Business Mistakes article.