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10 Fatal Mistakes Business Owners Make and How You Can Avoid Them

You want to grow your business and create the meaningful and fulfilling life you’ve always wanted.

But there’s a problem: You’re wasting significant time, energy, and money by making mistakes that are costing you the business and life you want—and you might not even realize it.

I know what that’s like—and it’s just not right. I built a multi-million dollar business from scratch and recently sold it for a very high multiple. There’s one key lesson I’ve learned along the way: It’s not always about starting new things, but knowing what to stop doing. This way of thinking radically transformed how I thought about my business, served my customers, and why my ideal clients wanted to work with me.

10 Fatal Mistakes Business Owners Make and How You Can Avoid Them

These 10 fatal mistakes I’ve made or watched other business owners make. And I can’t let that happen to you. They will cost you time, energy—and of course—more money. After reading this, you’ll begin to achieve success in a fraction of the time.

  • How 10 simple mistakes could be costing you valuable time, energy, and more money
  • The simple messaging shift that made my revenue skyrocket (and how yours can too!)
  • My secret to achieving success in a fraction of the time
  • Proven strategies to create the business and life you’ve always wanted
  • Your new game plan for attracting more ideal clients and creating an ambitious and highly motivated team

These 10 fatal mistakes will cost you time, energy—and of course—more money.

Mistake #1: Raising your fees without telling your customers.

A few months ago, one of the law firms that did work for me surprisingly raised their fees and didn’t tell me. In the invoice I received, the hourly rate had increased from $500/hour to $550/hour. I called the attorney and asked, “What happened?” His response? “Derrick, in the contract you signed, it says that we reserve the right to raise fees anytime. We haven’t raised them in a few years and thought it was time.” I was shocked. Yes, I had signed the contract, but I felt I was being taken advantage of and given no notice.

Listen—raising your prices is not a bad thing at all. But that’s not the way to do it. Here’s what to do instead: Tell your client, “Hey, we love working with you. I wanted to give you a personal heads-up that in the next 60 days, we’re going to be raising fees so that you’re not caught by surprise.” Remind your customers that you value them and always give them advanced notice when you raise fees. Don’t raise your fees and not tell your customers. Letting them discover that nasty surprise is a terrible way to do business.

Mistake #2: Blaming your customer for a mistake that YOU made.

Every time a new client would walk into my financial planning practice, I would tell them the same thing: “I am not perfect. You can ask my wife!” They would laugh—but in a way, I was serious. I would tell them, “We want to provide the best communication and service to you as possible, but we’re not perfect. Mistakes get made, so if you ever notice anything, call me right away and we will correct it immediately.” This communicated two important things: I’ve set the expectation that a mistake could occur and when/if it does, I take responsibility for it (even if it wasn’t me who made the mistake!).

In moments where you or your client make mistakes, you want to make them feel like they are the only person in the universe who matters to you. Listen closely and intently. Here’s what I’ve found: When you take responsibility and tell your client “I feel terrible about this” and they sense you feel worse about it than they do, it will endear them to you in a longer-lasting, deeper relationship. It’s not a transaction. It’s a relationship—and owning mistakes is key. Don’t run from mistakes and when you find one, bring it to the customer or client before they bring it to you.

Mistake #3: Responding to your family based on how your business is doing.

Picture this: You just crushed a major deal. You’re flying high. You go home to your family and say, “Let’s go out to dinner tonight! Let’s take that vacation! Let’s celebrate!” And your kids are thinking, Wow, Dad or Mom must have had a great day. But what about the other side of that? How do you respond when business is down and the economy is punching you in the gut?

There was a couple I worked with several years ago. The wife told me that every morning, her husband would go upstairs to check the investment account balances. His mood towards her and their family was completely based on whether his accounts were higher or lower that day. That’s not the way to live life. So what should you do? You can still talk about the challenges you’re facing, but bring your family and trusted friends into the conversation. It’s okay to say, “Hey, this is something I’m struggling with right now. Could I get your feedback on it?” This will allow you to step away from the problem and see it from a new perspective—and maybe even see a new solution.

Mistake #4: Being a generalist, not a specialist.

This one mistake could be costing you thousands, if not hundreds of thousands of dollars each year. So many businesses want to serve everyone–they’re the generalist. But, when you’re everything to everyone, you’re actually nothing to most people because your skills are spread too thin. Let’s say you had a serious heart issue. You could go to a general practitioner who diagnoses everything from the common cold to an ankle sprain. Or, you could go to a cardiologist who specializes in diagnosing and treating heart issues. The cardiologist probably has more education, more experience, and more knowledge in heart conditions—so you’ll probably pay more to work with them, right?

When I made the transition from being a generalist to a specialist in my business, my revenue skyrocketed. I wasn’t just a financial advisor. I specialized in retirement income planning. Suddenly, people all over the country wanted to work with us. No matter your job, you can specialize. What one thing do you help people do? Differentiate yourself by specializing in one thing. Then clearly communicate the value you bring and charge for it!

Mistake #5: Building a business just to make a lot of money.

I like money, and I’m not afraid to admit it. To me, money is a game—and I want you to win. I used to believe that winning the game of money was just about padding my bank account and building a massive investment portfolio. But that led me to momentary highs, not lasting meaning and fulfillment. Until I discovered my passion for giving back to local education by recognizing local teachers and student leaders. When I began to do that, I began to make more money to fuel that passion and impact even more teachers and students. Now you’re not only improving your customers’ and clients’ lives, you’re impacting people in your local community. I call this your “Generosity Purpose.”

Choose your Generosity Purpose and then invite your customers into it. Remind them that when they work with you, they’re a part of something bigger. You are making a fatal mistake if you just want to make more money. In fact, you’re burning your candle at both ends. And eventually, those ends meet and you burn out. If you want to relight that candle, refire your passion. Find a cause you can tie your business to that will drive you to go make more money so you can do more good.

Mistake #6: Not admitting your mistakes.

A wise friend once told me, “Derrick, remember that people like imperfect people better.” Think about this: When you go to a friend’s house and every pillow is fluffed perfectly, the floor is freshly vacuumed, and there are no dirty dishes in sight, you feel like you’re in a surgical room and can’t be yourself. But, if there’s a dirty sock under the couch and some pots and pans from last night’s dinner on the stove (welcome to my house!), it can feel like a warmer environment. That’s exactly what people want from you as a business owner.

Imperfect people mess up. We’re human! So when you make a mistake, own it quickly. The quickest way to tarnish your integrity is to avoid admitting your mistakes. Clients and your team like working with people who admit mistakes quickly, own them, and make things right.

Mistake #7: Not getting buy-in from your team.

Every business owner dreams of having a highly motivated and unified team. To have that, you need every employee’s buy-in. It’s easy to think that as the boss, your ideas are the best and you don’t need any feedback. But asking for feedback is one of the best ways to get buy-in from your team so that they like and trust you more. Whenever you have a new idea, present it to your leadership team and ask for their completely honest feedback.

One of the top reasons employees leave their job is because they don’t feel seen, heard, or appreciated. Invite your team into the ideas you have and challenges you’re wrestling with in the business. Ask for their candid feedback. You don’t always have to agree, but you should always value it.

Mistake #8: Being a totally hands-off manager.

We’ve all had a job where we felt micromanaged—and it’s no fun, right? Because of that experience, many business owners tend to swing in a completely different direction. No micromanaging = no managing at all! But here’s the problem: By not managing your employees, you’re missing out on building important relationships with them. You might not be micromanaging, but you’re also never around to validate new ideas or strategic solutions. They might be wondering if you actually care about them.

Instead, take time to meet with your key employees one-on-one weekly or bi-weekly. Ask them what challenges they’re facing, what questions they have, and what they’re excited about in their personal life. Invest in them as people—and they will help you grow your business.

Mistake #9: Forgetting who gave you the referral.

I know you’re super busy—and it’s easy to give all your time and attention to your highest-revenue-producing clients. But, you must remember who referred those top relationships to you. I’ve watched many business owners only focus on their top clients, while leaving the clients who referred them in the dust.

Remember, your customers are not all about revenue. It’s about relationships. Don’t have a short-sighted business philosophy. With every client you work with, think about the clients they could bring you. Now you’re not just working with one client. You’re working with the potential of 5-10 more clients in the coming months or years. Treat your referrers as the kings and queens of your business—and your business will feel like royalty (and so will you!).

Mistake #10: Not giving your team a way to grow professionally and financially.

“The salary gets them in the door. The incentive gets them wanting more.” A lot of business owners believe that giving a huge salary to their employees is enough. But it’s not—and it could be costing you a lot of money. Whether you have a team of 3 people or 50 people, you want to give them incentives when they reduce expenses, increase sales, or grow the business.

Every team member needs to have an incentive (or bonus structure). As the business owner, you’re always making more money whenever you’re incentivizing your team to help you make more money. Make sure every person on your team has a compelling reason to keep working towards their professional and financial goals.

Bonus Mistake: Not knowing the core problem your product or service solves.

Stay focused on the core problem and highest value you can bring to your clients or customers. Don’t know the answer? Ask your team, “What is the biggest opportunity we have to serve our customers right now? What problems are they facing?” It’s never about the fancy features and benefits of your products or services, but the problems you’re solving for your clients and customers.

Growing your business shouldn’t be complicated.

You deserve to build the business and life you’ve always wanted.

I know you want to crush your revenue goals, dominate your market, and enjoy a life of meaning and purpose.

But making these 10 costly mistakes in your business will hold you back from making the money and impact you want to have.

Alex Lim is a certified book reviewer and editor with over 10 years of experience in the publishing industry. He has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Alex has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. He is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Alex lives in London, England with his wife and two children. You can contact him at [email protected] or follow him on Website | Twitter | Facebook

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