How does an entrepreneur's perfectionism do harm to the business?

Maybe in order to be better, a business loses more?

I believe that the quality needs to be "good enough for the circumstances". On occations this means to be able to deliver something crappy, for example to test whether customers want a sort of product at all. The first iPhone could not send SMS's to multiple recipients! Other times one needs perfectionism. Being able to do both is the key to success.

Not if you put a price on you perfectionism.
I'm a software developer and I've learned (unfortunately on my own mistakes) that if you have a good detailed specification of what you are selling, with a clear price on it, it's better both for you and your client. If then you have a brilliant idea how to make your product better (closer to perfection) just write it down, put a price tag on it and sell it!

Sometimes it happens that I really like my client. You meet someone that doing business with is a pleasure and you want to give them a perfect product. I know it sometimes feels like "I can do this part for free, it will just take a couple of hours" - DONT'T! It's much better to figure out some way of exchange - for example - I was working on project for accounting company. They could not afford improvements in the project that I designed but they agreed to provide me free tax consulting.

Sometimes it feels like you need to fight with your own perfectionism but if you realize that if you put a price tag on it it will allow you to do more, better things you should be just fine :)

I truly believe that perfectionism makes entrepreneurial success difficult. I don't mean that you need to be sloppy with everything- professionalism and accuracy matters. However, if you get caught up in perfectionisim on every small thing you will get nothing accomplished and fail.