Contract Breach and Asset Mismanagement: 4 Business Mistakes To Avoid

To say that managing a business isn’t easy would be a huge understatement. You can do 99 good things and drop the ball on one aspect, and it all comes crashing down. If you’re currently managing a business, whether it’s a start-up in your garage or a conglomerate, you want to avoid these major business mistakes.

Read up on Six Ways To Make Your Business More Efficient here.

1. Contract Breach

When it comes to business, trust is everything. Your brand reputation is important in client acquisition and retention. One description you don’t want to associate with your brand is being untrustworthy. 

Contracts are the lifeline of your business. It states in writing all obligations and responsibilities of the parties involved. A breach of contract can lead to legal and financial repercussions. As a business owner, you want to ensure that your contract management is on point at all times. The legal fees could bankrupt your business. 

Taking care of your contracts will pay off in the long run. You get the most out of your resources while making sure that you don’t run into any problems. At the same time, studies find that poor contract management costs companies up to 9% of their annual income. The best way to avoid this mistake is by integrating a contract management software into your processes.

2. Avoiding Technology

And this brings us to the next point: Don’t avoid technology.

As we move towards the Digital Age, more and more automation and softwares are getting invented to make man’s life easier. For instance, a contract management software greatly improves a company’s contract management. It easily identifies any inefficiencies and eliminates redundant steps in the contract lifecycle.

Technology should not be feared. Use it to your advantage. Go on the market and research what is the best tech that can help you with your business. Many companies have become global successes because they were not afraid to automate. Netflix, for instance, embraced streaming technology. Instead of staying with their current business model of renting out DVDs, they upgraded their service with the help of the Internet. Today, they rake in billions of dollars in subscriptions.

3. Asset Mismanagement

You don’t need a large investment when you start your business. Some even start at zero. One of the common business mistakes that I see from startup business owners is asset mismanagement. They either overspend or underspend.

Let’s tackle overspending first as that’s a bigger issue. It’s understandable that when you start a company, you’ll need a lot of equipment. However, you don’t always have to get the best. This advice spans over manpower, equipment, real estate options, etc.

For instance, as a startup, you don’t necessarily need the most qualified employees. If they’ll be doing basic tasks like data encoding, sales, and logistics, there’s no need for you to pay a top tier applicant. The same is true with equipment. If they’ll be doing spreadsheets, you won’t need to buy a top-of-the-line laptop.

On the other hand, underspending is also a problem. You want to invest the proper resources in your business so it can stand on its own. Paying minimum wage for employees that perform inefficiently is not recommended. The entire spending process should be a compromise — a tug-of-war between practicality and taking care of your organization.

4. Not Enough Careful Planning

This is the number one root cause of businesses failing in their first three years. While it’s exciting starting a business and getting it on the road, you need to take time planning carefully. Create a marketing plan, set a budget, write down your mission and vision, and even do a SWOT analysis of your current team to ensure that you can survive the first few years of operations.