May 4, 2023
Maybe you have a product that deserves to be shared with the world, or you provide a service that you know others can benefit from. Or maybe you just want to be your own boss. Whatever the reason, starting your own business is an exciting process, but one that can easily be marred by a variety of factors both within and outside of your control. We’ve put together a list of 9 of the most common mistakes people make when starting a business, so you know what to avoid when embarking on your business dreams.
When starting a business it’s common for entrepreneurs to underestimate just how much cash and capital they will need to pave the way until their business hits its stride. Sometimes optimism makes people think that less will quickly become more, and cause them to plan only for the best-case scenario. Sometimes their business’ origins as a hobby can lead to complacency when it comes to figures. Either way, charging into your business venture without the proper funds behind you is a recipe for disaster.
You should have a solid financial plan that will keep you covered for at least the first 12-18 months, and this should include contingency plans for any complications that might arise.
Having belief in your product or service is vital, but adequately researching your area of business is even more important. Research equips you with the knowledge needed to understand things such as your industry, your competitors, and your target customers. This is the information that allows you to forecast accurately.
Research should take a number of forms, and the data you collect should be as varied as possible. For example, without properly researching your competitors, you won’t know how to accurately (and competitively) price your products and services.
A clear business plan is essential when it comes to starting your own business. It doesn’t need to be complex, but it needs to be easily understood, and cover all areas of your business. Your business plan is what keeps you focused in the first few months and years of your venture. Every decision you make should be with your business plan in mind.
Let your research influence the creation of your business plan. Use the data you have gathered to set realistic goals and expectations, and track your progress.
When it comes to hiring, there are two ways in which people make mistakes when starting a business. The first is taking on too many full-time staff members too soon. The second is not bringing in any help at all.
When your business is still finding its legs it’s important to strike a balance between areas where it’s more important to save time, and where it’s more important to save money. Bringing in staff, be they full-time or part-time, can help to spread the workload, saving you time and energy, but it runs the risk of being a drain on your funds – at least at first.
Failing to keep your books accurately and losing track of what belongs to you and what belongs to your business is a surefire way to waste, and consequently lose, money. The risk of this increases should your business run into any trouble during its early days, and you are forced to use personal funds to keep yourself afloat. This is one of the reasons why it’s important to be realistic when writing your business plan and gathering your startup funds.
Starting a business can be exciting, and while the idea of being your own boss sounds very freeing, the reality is that you can expect to invest more of yourself into your work than ever before. Not just running your own business, but building it from the ground up, is incredibly taxing – mentally and financially. This is something you need to prepare yourself for as part of your planning stage.
No matter how perfect your product or service is, if no one knows about it, how will they know where to come to? Marketing is essential to creating a successful business. It is also something that can begin even before your business is operating – building anticipation among your target audience.
Identifying which marketing strategy will work best for your business might depend on external help, especially if you have no prior experience in marketing. Investing in expert advice should be something you decide on when drafting your business plan.
Failing in your first attempt to start a business doesn’t mean that you’re destined to never run one. It just means that it’s up to you to learn from your mistakes and do your best not to make them again. However, entering into your first business with a plan for if things go wrong means you’ll be in a better position to try again when the time comes.
This also relates back to keeping personal and business finances separate – doing this will help to ensure that you have funds to fall back on should your business not fare so well.
Imagine the scene – your company is gaining attention and cash is flowing. Just as things are taking off, your business is forced to stop trading due to a legality you didn’t realise was even an issue. This not only impacts your income, but also your business’ reputation – which can stunt future growth, even when the matter has been addressed.
You need to make sure you understand your business structure, tax requirements, and what insurance you may need. If you’re not sure where to start with what insurance you may need, we might be able to help.
Starting your own business is a challenge that can be as daunting as it is rewarding. But arming yourself with the right knowledge can help to minimise the chances of anything going wrong. We have lots of advice for new small business owners, and are excited to be able to support small businesses through our services. Protect your business with our small business insurance – get a free quote today.