As someone who has worked with a lot of small business I can say there are many logo mistakes out there. I'm not just talking about logos I don't care for, I'm talking about mistakes that can cost you money! If you are a business owner with a homemade logo listen up, because this applies to you.
Using a Photo or Photo Based Logo: There are countless reasons why this will not work for you in the long run, here are just a few:
Scaling: Logos need to scale both small and large, with a pixel based image you are very limited to what you can print your log on.
Cost of Printing: You will run into huge additional printing costs on promotional products.
Rights of Use: If you didn't take the photo yourself you should have a signed contract with the photographer allowing you to use their image on all of your materials, for an unlimited amount of time.
Trademarking: Not a chance!
Font Based Logos (That are not outlined or flattened):
I have run into businesses who give me their company name and font when I ask for their logo. This is not only an issue for anyone who needs your logo, not all fonts are the same. Fonts can vary from PC to Mac, and from program to program.
Clip Art Logos: There are so many issues with this that I'm going to make another list:
Originality: Your logo is valuable to your company, it should not be valuable to a dozen other companies.
Rights of Use: Chances are you don't have the rights to use the clip art you found as a logo. Even if you purchased it, there is a good chance that in that block of fine print that you didn't read (and agreed to) there was a portion of it that said you are not allowed to use it as a logo.
Clip Art is usually Pixel Based: As a business you need a vector based logo (eps, ai, pdf) not a pixel based logo (jpg, tif, gif, png). This is important for promotional products, reversed logos (example: white logo on a black background), scaling (both large and small), and for other vendors who will want to endorse your product or service.
Hire a designer to create a professional logo:
Professional logos should set the tone for your customers interactions with your business. You should be proud of it, and it should be updated every 3-5 years. A designer will also avoid right-of-use issues, and give you all the logo files you will need. Remember to have a contract with a designer for all logos. Your logo is a company asset and it should be purchased outright not on an as-used basis (rights-managed).
Even if you can't open them on your computer, you need to have an eps or ai file on hand for vendors and press who use your logo. If you love your logo, but don't have an eps version most designers can re-draw the logo for you (however, expect to be charged for this).
Have Multiple Files on Hand:
You should have an assortment of logo files in your computer:
Black & White or Gray-scale: It's much better to have this done ahead of time, many colors don't contrast the same after they have been converted to grey-scale (example: red turns to black).
RGB (Red, Green, Blue): You will need these for web and television based graphics.
CMKY (Cyan, Magenta, Black, Yellow): These files are for brochures and other printed materials, they should also be at least 300 dpi.
Web Resolution (72 dpi): You need to have a few different size web resolution files on hand, for large and small logos. Using large web images on your website and others will increase download time.
Print Resolution (300 dpi and up): These files are for brochures and other printed materials, they should also be CMYK.
Vector Based: If I haven't bugged you about this enough already, here it is again: You need to have eps logo files on hand! If you don't this should be a red flag; either the person who designed your logo was not a pro, or you do not own the rights to your logo. If the former is true, hire a designer and get the correct files on hand. If the later is true, now is a good time to get a professional logo designed.
Logos are not easy to design, many professional designers even shy away from them. So don't settle for a homemade logo, or hiring your nephew to design the logo that sets the tone for your business. But, not only is the design important, there are legal issues with logos that can cost you in the long run. Value your logo and your brand my making the necessary investment.