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5 Entrepreneur Behaviours That Can Prove Costly

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As an entrepreneur, the way that you behave when conducting business is incredibly influential on the business itself. While some businesses can exist as entirely separate entities from their owners, this isn’t always possible— and it’s not particularly preferable either.

Ultimately, your business is an extension of you. It’s your dream, your ideas, your perspective— and it’s your income, too. As a result, the way that you behave can be hugely influential on your business.

Sometimes, this is a good thing. If you are a targeted, driven, go-getting kind of person, then it naturally follows that your business will be the same way. However, there are certain, less welcome, ways of behaving that can have a very negative impact on your business. If you can learn to control the less-than-ideal behaviours and focus on the good, then you could avoid making a number of costly mistakes.

If you’re keen to eliminate the bad mistakes and prioritise on the positives in your business, then here are five bad entrepreneur behaviours you’re going to need to be aware of…

1) Overconfidence

Confident is a good thing, and especially for entrepreneurs— but too much of a good thing can quickly go wrong. Overconfidence can lead to a number of costly business mistakes, including:

  • Bad financial decisions… because an overconfident entrepreneur assumes that they will be able to make more money just doing what they have been doing.
  • Poor hiring choices for employees… because an overconfident entrepreneur trusts their gut instinct during the hiring process.
  • Insufficient responses to criticism… overconfident entrepreneurs can react badly if criticized, because they have built an inner conviction that they are capable of anything. If they are informed of facts that contradict this, they can react angrily— if this happens in front of a customer or B2B partner, that relationship is likely lost for good.

What you should do instead…

Be confident in business, but try not to cross the line to arrogance. By far the best way to do this is to ensure that you’re always willing to listen to others, and particularly to feedback from members of staff or customers. If you take all perspectives on board and encourage honesty, then you can be sure that you’ll always have one foot planted firmly on the ground.

2) Feigning knowledge

There will be times in business when someone — a competitor, a member of staff, a fellow entrepreneur — will say something to you that you don’t understand. Now, there’s no denying that this is an unpleasant feeling, but how you respond to this kind of situation is vital. The absolute worst way to respond is to pretend that you know what they’re talking about, when really, you’re wondering how quickly you can excuse yourself from the conversation so you can Google for context.

Overconfidence can cost you:

  • Respect. If the person you are talking to identifies the fact that you’re bluffing, they will lose all respect for you.
  • Poor decision making is the natural friend of feigning knowledge; you may be prone to making decisions based on what you think you know rather than what you actually do know. The cost of repairing these mistakes is not only an expense your business doesn’t need, but a completely useless expense too— it never needed to happen, so it’s a hole in your profit margins for no gain whatsoever.

What you should do instead…

Be honest. If someone says something to you that you don’t understand, tell them: “I don’t know what that means. Could you explain, please?”. They may even be glad to explain to you; it’s a nice boost for them, and could even flatter their own ego as you ask for their help.

If you’re not comfortable in outright saying that you don’t know what someone is talking about, then just say something along the lines of: “I must admit it’s not a subject I’m that familiar with off the top of my head, more research required I think!”. Make it a joke in the moment, then do the research when you have a chance.

3) Dismissing trends

No one likes trends. We all think that they’re passé, and everything tells us that we should buck trends, go our own way, and only care what we think personally. While this might be a great way to live in your personal life, it’s actually pretty terrible advice for an entrepreneur. If you ignore trends as an entrepreneur, then you run the risk of…

  • Being left behind. If your company isn’t doing something that all of your competitors are doing, then you’re going to lose customers. For example, if you were a kids toy store during the loom bands craze, you could have chosen to “buck the trends” and not stock loom bands in a desire to be more individual. In reality, you’d just have lost customers, because you didn’t have the one product that everyone wanted.
  • You also run the risk of losing money on the items or services you try and go with instead. Continuing the above example, if you’d chosen to invest in another toy to try and go against the trends, you’d have invested in a toy that few people wanted. As a result, that investment would be a financial mistake, and it would actually be compounded by the fact you lost money not choosing to jump on the loom band hype train.

 

What you should do instead…

Being individualistic in your everyday life is great, but it’s not something you want to carry over into your business approach. If you see trends developing in your industry, then you have to jump on them— it really is that simple. A business that deliberately ignores trends is a business that willingly hurts its own ability to make a good profit.

4) Not separating your business and personal finances

Every entrepreneur knows they should ensure that their business and personal finances are always kept separate,  but the reality is that this doesn’t always happen in practice. This is all the more surprising when you consider the cost of this accounting error can be incredible:

  • It’s far too easy to miscalculate your tax liabilities when you don’t keep your business and personal finances separate, which could leave you facing fines or even imprisonment if you make a mistake on your taxes.
  • If the business fails and your personal finances are tied up in the business, there is a strong likelihood that creditors will be able to claim monies owed directly from you. This could result in you having to apply for personal bankruptcy due to business problems.
  • You’ll also find that not keeping separate business and personal finances is just complicated and time-consuming; living like this is actually more complicated than not doing so.

 

What you should do instead…

Complete separation of your business and personal finances is the only option in this scenario. If you want to start the ball rolling on this, then there’s a great starter guide right here.

5) Relying on your staff too much

 

When you go to the trouble of carefully recruiting a group of staff that you can trust, it’s entirely natural that you’re going to want to rely on them. However, staff can very quickly become overwhelmed, especially if you are entrusting them with tasks that are otherwise outside of their remit.

There are a number of ways in which overloading staff will ultimately prove to be costly:

  • Your staff will be more likely to leave, and it has been repeatedly proven that high staff turnover levels can be incredibly expensive for businesses.
  • Staff may feel forced to say they can do something they do not actually have the expertise to do— this usually happens because they don’t want to let you down. This sounds like a positive, but it isn’t: the work they will produce is non-specialised and potentially even incorrect. Rectifying these errors can be extremely expensive and time-consuming when they are discovered.
  • Finally, if you over-rely on employees, those employees will be more stressed and prone to burnout. This could lead to staff taking time off from work, costing you money in sick pay and meaning that you company struggles to cope in their absence.

What you should do instead…

Rather than over-relying on your staff, be ready and willing to outsource to other companies. This is especially important for key business-related tasks that require a high degree of expertise in a specific field.

Outsourcing allows you to relieve the burden on your staff, but also to take advantage of talented, specialist companies that are able to deliver great results for your business. There are thousands of incredible outsourcing companies out there, from SEO companies that offer packages for organic improvements in your rankings to qualified accountants who can spot any areas of your budget where you’re overspending. These outsourcing companies are specialists; they’re not overloaded and thus more prone to making mistakes; and they’re able to focus wholeheartedly on what you are asking of them. So not only do you save on the high costs of staff turnover and damaged morale, but you’ll also maximise your investment in these key areas thanks to the benefit of expert insight— win/win!

In conclusion

One of the most important things to remember about the five points above is that they are not terminal. If you have been making these mistakes, that’s okay— but it’s important you now make the necessary changes.