01 Oct 5 Mistakes To Avoid When Starting a Business
It is completely normal to be feeling a mix of excitement and nerves during the initial stages of starting your own business. You have made the plunge into self-employment, which is a massive achievement. However, starting your own business is not an exact science. There is no doubt you will face challenges along the way.
It’s important to remember that making mistakes is all part and parcel of setting up your own business. Even the world’s most successful business owners will be the first to admit they got things wrong.
We’ve put together a list of the five most common mistakes to avoid when you’re starting your own business. Eliminate these 5 mistakes, and your new enterprise will be much better for it.
1) Are you focusing on sales instead of profit?
There is a belief amongst new business owners that bringing in more sales is the path to success. Unfortunately, a lot of new business owners fall into this trap. They think this directly translates into increasing the money they make. This is not the case.
Aiming to increase sales without focusing on the bottom line will lead you down a dead end.
This is because the sales figure doesn’t take business expenses into account. You need to pay attention to your profit margin, not your sales.
Profit margins are what make all the work and stress worthwhile. The growth of your business depends on creating profits. Avoid getting in a race to the bottom with your competitors by reducing prices to increase sales. Value your product or service adequately, even if it reduces sales initially. Once you set the price for a product, it is very difficult to raise it again.
2) Have you researched your idea?
Every entrepreneur believes their idea is going to be a success. Otherwise, there would be no point in starting a business at all. The problem is their judgement can sometimes become clouded. This is because they’ve invested so much time and energy into their idea.
They are so excited about their product that they didn’t stop to ask important questions like -have I got any competitors?, ‘what is the cost of making my product? and so on. It is so important that you research the viability of your business in the real world. This is where market research becomes invaluable.
Taking the time to carry out research is so important. It will determine the potential of your business and set a benchmark for potential success. You will then be in a better position to get started or go back to the drawing board.
3) Do you have a separate business bank account?
A lot of business owners are tempted by the initial convenience of using the same bank account. Don’t try to cut corners because it will lead to problems down the line.
You’ll be especially glad of having a separate business account when it comes to filing your end of year taxes. Picking through an account mixed with personal and business details will be an absolute nightmare. Also, if your business is ever subject to an external audit, the whole process will be simplified enormously by having a separate bank account.
Setting up a separate business account when you go out by yourself will allow you to paint a clearer picture of the financial health of your business. This is massive in the early stages of your business. An organised business bank account and financial reporting will help you easily determine how things are looking on a weekly basis.
4) Make sure you’re not too reliant on one revenue source
When you’re running a business, it is very important to ensure your revenue is coming from a multitude of sources. While it is always good to have a large client, you can’t become overly reliant on them. If they were to close or terminate your contract, you would be left in no man’s land. In essence, you will become a hostage because your business won’t survive without it.
You need to establish where you want your business to go. Having different revenue sources helps businesses ensure there is a constant stream coming into the business. This is especially important during economic downturns and recessions. The key to identifying new sources of revenue is in your business model. Adapting your business model can either create a new market or allow you to exploit opportunities in your existing market.
5) Don’t try to do everything yourself
It is common for people to want to handle all aspects of a business when they are starting out. This is not a good plan. Remember, it is impractical and unrealistic to carry out each individual task by yourself.
These days, getting help has never been easier. The internet means we can instantly connect with an online forum, a business coach or experts in a specific field. Also, technology can be very helpful. There are chatbots to assist with customer service and online virtual assistants can handle some of the more menial tasks. There are various platforms to hire freelancers for different projects so you don’t have to commit hiring staff full-time.
If you’re in a position to hire staff in the early stages of your business, make sure you assemble the right team. Hire people with a broad range of skill sets, particularly in areas where you might be lacking knowledge. Hire people that will contribute to the business while teaching you a thing or two.
If you make a mistake, move on quickly
If you avoid the above mistakes, you stand a great chance of success. However, running a business involves risk. You will inevitably have problems, but it is important not to beat yourself up when things go wrong. Learning from your mistakes is one of life’s most valuable lessons. In the United States, investors are more likely to fund businesses run by entrepreneurs who have previously failed because they believe they have valuable experience.
Read more – Why working with influencers can increase your sales.