NEW YORK (WCBS 880) -- Mistakes can be costly, especially during such an uncertain time.
On the WCBS Small Business Spotlight, sponsored by Dime Community Bank, Joe Connolly and Neil A. Carousso talked to Jean Chatzky, an award-winning financial journalist and CEO of HerMoney Media, Inc., who shared some of the most common mistakes business owners make and new businesspeople should avoid.
1. Not Enough Working Capital
Chatzky says a common mistake new business owners make is failing to plan for how much capital they need beyond getting started.
"Particularly right now with so many people joining the great resignation, leaving their workplaces, we've seen a lot of people, particularly women, launch businesses, hang out a shingle, take their skills, and try to turn it into a revenue stream for themselves," she said, continuing, "If you could do it with a client or two under your belt, that's fantastic, but you need to also understand what it's going to cost you not just to get going but to keep going as you gain some ground."
Chatzky advises business owners to plan for enough working capital to see some success. She also tells budding entrepreneurs to pay close attention to what people tell them that they are good at and pursue an area where they can charge for their skills.
The so-called "great resignation," she alluded to, is putting pressure on the most hard-hit industries struggling to recover from the pandemic. A record 4.5 million Americans quit their jobs in November, according to the U.S. Bureau of Labor Statistics. Workers in the hospitality industry were most likely to leave for higher paying jobs.
Chatzky said preventing costly turnover comes down to managing relationships.
"If you've got people on your team that you want to help grow, that you want to encourage to grow, you need to know what they want, right? If you're not asking them what they want, then they're going to look for what they want elsewhere," she said.
2. Operating Too Big
"You got to be scrappy, especially when you're bootstrapping," said Chatzky.
The financial expert recalled an instance early on at HerMoney Media, which Chatzy co-founded in 2018, when a client left a big investment bank to start his own company.
"He wanted to do some focus grouping," she said. "His idea was, 'Well, you hire a focus group company.' And, my idea, was, 'No, you send out some feelers through your social channels and your newsletter and you ask people to show up for a Zoom call that costs you nothing.'"
The small business mindset will help owners and managers serve their customers and turn profits while operating lean.
3. Underestimating the Hiring Process
Chatzky explained on the Small Business Spotlight that business owners often underestimate the importance and difficulty of hiring.
"Realize what you can't do. Realize what you're not good at. And, as you start to bring in other people to support you whether they're employees or contractors or freelancers, look for people who do those things better than you do. Don't be threatened by the fact that they have skills that you don't," she said.
She told Connolly and Carousso that she hires people in their 20s for their social media skills. The HerMoney Media CEO recommends contracting out to potential employees for a period before putting them on payroll to see if they are a good fit for their company.
Despite all the challenges businesses face with the ongoing COVID threat, Chatzky believes business owners are more optimistic than most people.
"I think business owners have an inherent sense that this is going to work, that I can do this," she said, adding, "They're more confident in their own abilities. That can be good and that can be bad, right? If you're overly confident, you can lead yourself astray, but I do think they're different in that way. Some business owners just don't want to work for anybody else. I think there's definitely a breed like that; I think it's a growing breed."
She told WCBS 880 she sees her customers and her employees as her bosses. It helps keep her grounded and her firm growing.
Chatzky co-hosts a new national radio show with journalist Soledad O'Brien called "Everyday Wealth," presented by Edelman Financial Engines.
"The listeners are anybody who is looking to make more of their money," said Chatzky.
Everyday Wealth airs Sundays at 11 AM on WCBS Newsradio 880.
Watch Joe Connolly and Neil A. Carousso's full conversation with Jean Chatzky on the Small Business Spotlight video above.