The most common mistakes in business

In the world of business, we must consider all factors in order to have a successful journey. It is funny because after some research, I could find that just a few people actually search for business mistake examples. In my opinion, it is important knowing what kind of issues we might find during our business development. In other words, it is useful learning from other people mistakes.

To make my point clearer, I will use an X company as an example. X Company is a business dedicated to sell and provide services of alarm installation to cars and houses. The company is owned by Pete Unknown. X company has been running for eight months, but they are having some financial issues. Furthermore, they had several complains from most of its customers. Pete Unknown has announced that he will shut down the business because it is not longer working.

The situation that X company has, it is one of the most common to all businesses: Financial problems and unsatisfied customers. As a matter fact, these two factors are the cause of most business failures. So, what did Pete do wrong to lose its business?

According to our fictitious story, Pete won the lottery and decided to start a business. However, Pete is not an expert in the subject of business development. In addition, he decided not taking advice from an expert because he thought that hiring an expert is a complete waste of time.

Pete decided to get into the business of alarm retailing and installation service. He decided this niche because he is an expert in electronic alarms, but he has no experience in retailing. Peter was anxious to start his new business. Despite Peter knows a lot about alarms, he decided that purchasing cheap Chinese alarms was the best option for his business. However, he never considered any quality issue of getting cheap uncertified products.

Once Pete purchased all electronic alarms, he hired some staff. In the same way, he got cheap products, and hired cheap staff too. Peter gave a crash course of alarm installation to his new staff, and once all was set up; he opened his business doors.

Fortunately, Peter has a friend in the local radio station and got free advertising for his business, and in a matter of a week, The X Company started its operations.

The X Company serviced about 200 clients in a matter of two months. However, an 80% of these customers complained about having a bad service. Furthermore, some clients complained that their alarms stopped working.What happened there?

Pete did not give advice about customer service to his staff. In addition, his employees were not savvy at a technical level, so they did not test the product after the installation, and sometimes they did not install the product properly.

After six months Pete realized that his bad planning started to consume a lot of resources, and the business was not really profitable. Moreover, he found out that most of the products he got from China were defective, and they did not have a warranty. So, he had to rework the majority of the products and that required a lot of time and resources. Also, he realized the money, was not enough to keep the business running.

In reality, Peter’s mistakes can be resumed in one word: improper business planning. However, most business mistakes are resumed in bad planning and bad management.

If Peter had taken the advice from an expert the scenario would have been different. He would have found out in the business plan, whether his business would be profitable. Furthermore, he would've found out, how important hiring professional staff and defining a mission and vision statement is. Moreover, he would have found out that a business has a purpose, and that purpose is not just getting good money from it but giving something worthy to the population. If Pete had done everything properly he might be the leader in the industry of alarm retailing and installation service. Fortunately, there is neither Pete Unknown nor The X Company.