8 Business Mistakes That Could Cost You Your Business

Let's get one thing straight. Business success certainly isn't pot luck. Running a business is never easy - no matter how successful you are - and so you have to expect to make a few mistakes along the way. However it is how we react to and learn from these mistakes that will play a key role in determining how successful your company will be.

It will be no surprise to learn that if you continue to make the same mistakes it is inevitable that you will at best find yourself in dispute with a customer or at worst losing everything.

As one of the UK's leading specialists in dispute resolution services in the construction industry, we  have helped numerous companies out of difficult situations however our experience shows that the problems are being created by the same issues time and again.

I am sure that at some point everyone has made at least one of these mistakes at some point in their careers. Hopefully you have taken corrective action. If not, give us a call on 01592 892425.

1. Know Who You're Working With

Every company expects credit but the sad truth is that not all companies are credit worthy. It could save you an awful lot of heartache if you do your homework at the outset to understand the financial position of your client (and in some cases their client) before you spend a lot of time and money in the project.

And don't just stop at their accounts. Look at the directors and their track record. It's amazing what you can find if you invest in a quality credit checking system.

It is one thing winning a project but the only time it becomes profitable is when you get paid for it.

Contact us today to find out which credit checking system we use.

2. Weak Tendering Process

The pressures of tendering have never been greater. Deadlines are shorter. PQQs are more detailed. Competition is at its fiercest.

But the underlying problem that we come across in most disputes is companies not having a strong tendering process to validate contracts prior to tendering. And to make maters worse they then do not have a systematic approach to every aspect of the tender and their estimating process.

If you are not winning as many tenders as you think you should be, our business development team can assist with developing a strong PQQ process, assessment of pricing strategies and additional marketing support to get you on the tendering lists that matter.

3. Not Reading The Small Print

Ask yourself a question. Do you read every line of every contract that comes through your door? If not, why not?

The inclusion of ambiguous phrases that can cause no end of problems and key clauses that in some cases cause you to sign away some of your rights, could prove disastrous further down the line and make it difficult to build a dispute.

Leave nothing to chance. If you don't know what a term means, ask someone who does. Consult a lawyer, a colleague, a specialist, heck even the client.

And don't forget that naivety isn't a defence. Whether you formally accept the terms and conditions in the contract or not, by starting the contract you may be legally bound by them.

4. Having Poor Terms and Conditions of Business

How strong are your terms and conditions? Will they protect you in the event of disputes? Do they cover you for delays caused by someone else? Do they cover withheld payments? Do they explain interest due for late payments?

Strong terms and conditions are the very foundation of good business practice, however  you have to be willing to enforce them.

5. Inaccurate Costings

When we are asked to review the tendering processes of clients, the key element that we analyse is how the cost base of the company and the project is calculated. Are you taking into consideration the cost of transporting your overheads to the site for the start up and the ongoing works? Are you factoring in your overheads? Are you factoring in downtime? Do you provide a budget for supplying additional resources to meet a shorter work schedule caused by contractor delays?

By understanding your cost base you can provide more accurate costings that will enable your company to protect its future.

6. Not Claiming Interim Payments

Cash is king in every sector however in the construction sector it is critical that you build interim payments into your contract - no matter how secure a financial footing you think you are on, or indeed how secure your client appears to be.

Be specific on when the payments are due and don't budge an inch when the client tries to negotiate half way through the contract.

7. Not Taking Action When Payment Is Late

If you find yourself in a situation where the client cannot or will not pay, do not be forced into a situation where you feel you have to 'help them out.' You could simply be getting yourself into deeper trouble with further costs.

Notify the client immediately when you find out the payment is late, refer them to your terms and conditions  and detail exactly what will happen if you do not receive payment within a specific time frame.

If they fail to meet this agreement suspend activities or orders until you reach a settlement.

If they continue to withhold payment, advise them of the potential interest they will face and look at how you can resolve the dispute. Remember that you are protected under the Construction Act and you are well within your rights.

8. Being Blinded By The Numbers

We all dream of landing that record contract but it is vital that you deal with one project at a time and assess each project on its merits. Remember the only number you should be interested in is the profitability of the project - not its projected value.

The industry is also rife with rumours of clients and contractors dangling big contracts as an incentive for resolving disputes, encouraging low bids and fending off claims.

As we always explain "Offers on the table may appear bigger than they actually are."

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