Let’s be honest: Most of us dream of running a swift, smart business. But they aren’t exactly 100% sure how to make it happen.
Relax. If everyone was totally confident in how to become their own boss sooner rather than later, we’d all be on board.
Many of the most common rookie mistakes that sink new businesses are rooted in one element: Time.
Think about it. When you rush into the world of entrepreneurship, you inevitably miss out on details and make mistakes which ultimately drain your budget. That’s not to say that you should totally freeze up versus take action, but rather understand why the majority of business owners fail in the first place.
But what sorts of mistakes are we talking about? Consider the following four snafus for starters.
1. Not Doing Their Legal Homework
If you aren’t lawyering up when it comes time to start your business, you’re inevitably opening a can of worms in terms of problems you’ll face down the road. This is especially true if you’re running a business that’s dealing with clients and customers face-to-face.
From understanding how to form an entity for your business to knowing what to do in case someone takes legal action against you, having legal counsel on deck should be a top priority toward avoiding potential disastrous decisions that could sink your business.
2. Ignoring the Local Market
Do you know who your competition is?
How many other local businesses are currently in your space?
What’s your unique selling proposition to customers in your own backyard?
For those unable to answer such questions with confidence, perhaps it’s time to rethink whether or not your business has the potential to become a staple within your community.
No, business owners should not avoid taking action due to over-analyzing the local market, but it’s crucial to understand whether or not your company is actually filling a void or is simply there for the sake of being there.
3. Hiring Too Quickly
The idea of growth is enticing to entrepreneurs from all walks of life. That said, being a solo business often makes sense during the start of your entrepreneurial journey versus bringing on a bunch of staff that will quickly drain any capital you once had.
In short, employees are expensive. There’s no two ways about it. Even if you’re working with friends and family (which can be a huge emotional burden in and of itself), bringing on more workers that you need initially is the silent killer of so many businesses.
The key is to hire only when it makes sense financially rather than out of desperation. If you’re strapped for help, also bear in mind the booming gig economy of freelancers and contractors that can assist you on an as-needed basis. Such professionals can help you anywhere from marketing to physical labor and beyond.
4. Careless Budget Decisions
It’s easy to get caught up in the hustle and bustle of being a business owner to the point where our budget starts to fall by the wayside. This trap applies both personally and professionally as we make any sort of significant purchase. Think about it: when you’re your own boss, any money you spend has a direct impact on your bottom line and ability to be profitable.
When in doubt, businesses should be as thrifty as possible, overestimating risks and saving more than they think they might need in case of a slow month or what-if situation. The rule of “better safe than sorry” should be the motto for new business owners looking to survive for the long-term.
Chances are you have the chops to start your own company successfully, just be sure to have your bases covered before you get started. By having these steps in the back of your mind, you can know exactly what pitfalls to avoid as you pave your way toward financial freedom.