Starting a new business takes a lot of time and effort – especially if you’re making mistakes along the way. Save time and money by learning about common start-up business traps and exactly how you can avoid them.
No Business Plan
A lot of entrepreneurs don’t think they will need a business plan, especially if they aren’t seeking any type of loan from outside investors. You may even think that the time it would take to sit down and crunch all the numbers and data could be better spent. However, a business plan is your guide to what you want to accomplish. It covers many different aspects of your business, providing the blueprint for everything you will be doing. Neglecting to create a business plan may not seem like a problem at first, but you will run into problems as you move along and discover that you don’t have a plan to cover different areas.
Not Picking Partners Wisely
When you begin talking about your business, you may receive offers from various friends and family members to go into business with you. This may seem like a good idea at first, but there are so many stories of these partnerships going south and ruining not only the business but also the relationships. It is important to be wise about picking a business partner if you want to have one at all. If you do decide to have a business partner, make sure you pick one who is a hard worker, that you get along with, and who has the same passion and commitment that you do. You may want to consider drafting a contract for your partnership as well to protect everyone who is involved.
Starting a new business can be difficult, and sometimes it might seem tempting to take the easier route. For some things, this may work, but for others, it could be disastrous. Make sure that you take the time to do everything properly. When it comes to legal paperwork, building relationships with clients and suppliers, hiring employees, and providing quality products, it is important to take your time and do everything properly. Do not rush your processes, no matter how tempting it may seem. Oversimplifying can introduce weaknesses into your business at the very beginning that are hard to correct later.
Not Enough Collateral
You may have the money that you need to start your business, but don’t forget to have a backup fund to draw from. Your business will start accumulating expenses immediately, even if you don’t have any profits coming in. You need to be able to pay for your expenses or your business will go under before you even get going. You also don’t want to have to drain your savings account to pay for your business under the assumption you will have profits soon. This is a dangerous way of thinking, and it can also lead to financial entanglements that could bankrupt you. You can use a credit card to finance your business, but be wary of overreaching your ability to pay off the money you borrow.
When you first start out, you want to make sure that you keep your customers happy so they stay with you. It can be discouraging to run into problems when you are working clients, but avoid the mistake of overcorrecting when this happens. It can be tempting to go in the complete opposite direction of the mistake, in order to avoid it happening again, but this is dangerous for your business. You don’t want to get a reputation for changing your processes and services constantly. Additionally, you may need a simple course correction to fix your mistake. Start by making adjustments, not major changes.
Starting a new business is an exciting time and you can avoid many of the common pitfalls by paying attention and utilizing your business plan properly to avoid the more grievous mistakes.