According to the However Big Your Ambition Report, which was commissioned by Volkswagen and surveyed 1,000 small-business owners, employing a friend or relative who wasn’t up to the job is one of the most common and most regretted mistakes that small-business owners make.
One-in-three respondents admitted to recruiting someone who turned out to be totally unsuitable for the position, the survey’s highest-ranking business blunder, while setting prices that were either too high or too low was the second and not taking advantage of an opportunity was third.
Other errors included offering too many discounts, trusting the wrong person or business partner, investing in the wrong equipment, ignoring good advice, allowing a junior to have more responsibility than they could handle and losing a good member of staff because they were refused a pay rise.
According to the report, on average, bad decisions cost the typical small business £2,340 a year. A third of respondents described themselves as “ambitious risk-takers” and 35% admitted to “letting their heart rule their heads at some point while running their business”, with 61% of those reporting that the decision had proved detrimental.
And the outlook for many remains rather gloomy. Nearly three-quarters (72%) of respondents now feel “less optimistic about 2013 then they did at any point in 2012”; 90% don’t expect to achieve their annual financial targets and just one in five says their business is ‘busy’. Almost two-thirds of respondents say they are reluctant to make long-term investments at this point.
The report was conducted to mark Volkswagen launching its new online SME mentoring service on its Facebook page. Mentors include Allegra McEvedy (co-founder of restaurant chain Leon) and Andrew Denham, founder of The Bicycle Academy.