5 Imperatives to Avoid Bad Business Decisions
A common saying in business and personal growth is that mistakes can be a great teacher. And while that can certainly be true, it is always preferable to learn from other peoples’ mistakes and avoid the pain from your own. Having studied businesses and their mistakes for several years now, hopefully I can provide you with some principles that will help you avoid some common business missteps.
1. Familiarize Yourself With Local Laws in Order to Avoid Breaking Them
Accidental trespasses create some of the costliest mistakes small business owners make. Understanding Idaho business law will save you from making many bad business decisions. This is especially problematic when going across state or national lines to do business. Business News Daily has a helpful article on how to do business internationally.
2. Avoid Doing Business With Anyone You Wouldn’t Introduce to Your Grandmother
It’s wise to avoid doing business deals with people who are the least bit shady. If you’re aware of anything untrustworthy about a potential business associate, run rather than getting involved with that person in a business deal.
It’s also wise to stick to doing deals that are mutually rewarding for all parties involved. Problems often arise when one party gets excessively greedy in dealings with business associates. Do business with integrity, and do business only with those who do integrity. You can’t litigate someone into being honest, and there’s nothing magic about a well-drafted contract that makes dishonest people honest.
3. Identify the Hidden Costs in Every Prospective Business Deal
Every business deal has associated costs. A deal may seem profitable when you examine the upfront costs, but hidden costs can render it unprofitable in the end. Before committing to any deal, it pays to do a thorough investigation of where hidden costs might arise.
Every business deal also involves opportunity costs; it pays to educate yourself about what opportunity costs are and learn how to assess them when you make each business deal.
4. Seek Advice From Trusted Mentors With Relevant Business Experience
Every small business owner has blind spots. Asking for advice will give you insights that could help you avoid potential mistakes. Dave Ramsey says, “If you want to be skinny, do what skinny people do. If you want to be rich, do what rich people do. If you want to be successful in business, study successful businessmen and emulate them.”
5. Know When to Call Your Business Attorney
While it’s helpful to get advice from mentors, friends or experienced employees, there are times when your attorney is the only reliable option for obtaining suitable advice.
You can learn a valuable lesson from one of my acquaintances who owns a textile importing business. His company sought a joint copyright with their Italian business partner on a fabric design the two companies had developed together. Instead of having his attorney handle the copyright proceedings, he delegated the task to an inexperienced employee in the design department. Later when there was a dispute over the design, he discovered that his employee filed the copyright application incorrectly. A simple consultation with his attorney could have prevented business litigation that turned out to be far more costly than his initial attorney’s fees would have been.
These 5 imperatives will help you avoid many of the most common mistakes small business owners make. We hope you’ll take action on these ideas in the future as you make decisions on behalf of your business.