Starting your business can be fun and exciting. But, some mistakes can squash your business before … [+]
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As a serial entrepreneur, I know that starting a business is as exciting as it is scary. But, you decide to take the risk when you open up shop. So, how can you be successful? Well, the first step is to stop standing in your way. What do I mean? You need to avoid the mistakes that can close your business before it begins.
6 Mistakes That Can Stop Your Startup Before You Start
Beginning a business can feel a lot like a baby bird getting shoved out of the nest. Will it fall or will its wings catch it?
To prevent the fall and see your business soar, avoid these six mistakes.
1. Being Afraid To Fail
Again, starting a business can be scary. Exciting, sure. But also scary. And when you know that mistakes can spell out big trouble, it gets even scarier.
But, being afraid to fail won’t set you up for success. In fact, that fear can hold you back when starting a business. You might not take necessary risks (or even open your business at all!). As Babe Ruth said, “Don’t let the fear of striking out keep you from playing the game.”
How To Avoid
The easiest way to avoid the fear of failure or of making mistakes is to prepare. So, create a clear business plan, review your books often, and stay up-to-date on things like tax laws and accounting best practices.
Does the idea of managing your books or keeping on top of laws and regulations fill you with dread? Consider hiring a tax professional or business lawyer.
And, remember that everyone makes mistakes. To err is human. Finding and fixing the mistakes helps you move forward with a lesson learned.
2. Not Having A Marketing Plan
So, you have your products in stock, you’ve opened the doors, and now your business is slow. What happened? Part of the problem can be that you don’t have a marketing plan. And without a marketing plan, you won’t be able to understand your target market.
How To Avoid
Before starting your business, write a business plan that includes how you plan to market your business. Part of that plan includes performing a market analysis to see how your business fits in. In the market analysis, you’ll gather data on your potential customers and competitors.
After you analyze the data in your analysis, put results into action. You can revamp your marketing strategies, respond to reviews faster, or even ask customers to fill out customer surveys.
3. Wasting Money
In the beginning, it’s easy to stretch your funds thin. After all, you may be purchasing equipment, renting out a facility, spending money on advertising, etc.
But, spending too much too fast is sure to doom your business before it truly begins.
How To Avoid
Budget, budget, budget. Wasting money occurs when you fail to plan. So, create a business budget and stick to it. Determine where you plan to spend your funds and how. But, remember that the budget is an outline, and it’s better to come under budget than over.
At the end of the year, review your budget again to see how much you spent. If you’re under budget, you can reinvest the funds in your business (hooray!).
4. Trying To Do Everything Yourself
Sure, you wear a lot of hats as a business owner. So, you put the weight of the world on your shoulders and refuse to ask for advice or knowledge from anyone. The next thing you know, you’re burnt out and losing passion. And without passion, you may think it’s time to throw in the towel.
How To Avoid
Remember that it’s okay to ask others for help. You can seek advice and wisdom from other business owners. And, you might even consider a business structure that allows you to spread the work between two or more people (e.g., partnership).
5. Not Hiring Responsibly
Your high school buddy is undoubtedly a good friend to have. But, are they the best fit for your business? That may not be the case. Remember that your business has specific needs that a new employee will be filling.
Hiring employees is no joke. What you think will be a stress-reliever might just cause a headache, especially if you’re not up to speed on employer responsibilities. And if you’re not ready for all that being an employer entails, you might just stretch your budget (and your patience) to its limits and lead you into debt you can’t afford.
How To Avoid
Before you hire, first study your budget to see if you can afford an employee. Look at how much an employer pays in payroll taxes, typical wages in your industry, and how much work you need to do. Then, ask yourself if you need a full- or part-time employee.
Consider speaking with your accountant to go over your books in-depth. If your books paint the picture that now is not the time to hire, come up with a game plan to get to the point where you can hire extra help.
If you are in the position to hire, determine what exactly your employee will do for you before writing up and posting a job description. Nail down the details, and do your due diligence with your hiring process.
6. Not Using Proper Bookkeeping
Many business owners are not accountants. But, that doesn’t excuse you from your bookkeeping responsibilities. Failing to implement a bookkeeping strategy could lead to sloppy books and incorrectly filing tax forms.
How To Avoid
First, I highly recommend hiring an accountant. Why? Accountants can make sure you’re on the right track. And, they can help you plan your budget, file corporate tax returns, and more. They are the best resource available to you to analyze your data because they know accounting inside and out.
But just because you hire an accountant doesn’t mean you’re off the hook. You should have a basic understanding of accounting and where your day-to-day money goes. Keep tabs on your cash flow between visits to your accountant by streamlining your accounting software. Why use accounting software? It will help you process invoices, track payments, pay contractors, and more.
Not quite sure how to start understanding accounting? The internet is a great tool to teach yourself some of the basics. You can even go ahead and subscribe to accounting newsletters to bring tips straight to your inbox.
Squash Mistakes Before They Squish Your Business
All in all, it’s normal to make some mistakes when starting your business. Heck, I know I did! So if you do make one of these startup mistakes, put in the work to fix it and learn from it.
