Stating your own business is a big step, full of decisions, solid planning and a good dose of motivation. The unfortunate reality is a lot of small businesses don’t make it and that’s why we’re here to shed light on some of the risks and dangers involved with starting a business and how to avoid them.
1. Lack of financial support
It pays to do the numbers and to have a plan when starting your own business. Having an understanding of the expenses you need to budget for and what you can expect as an income helps you set up for a stronger financial position right from the get-go.
Poor financial planning is one of the main reasons that SMEs go out of business but with a bit of care and management your business can thrive, even in the early days.
Some things to consider when it comes to finances:
- If you are using your savings, make sure that you aren’t creating a situation which will put you in debt and worse off than when you started.
- Consider a business loan to help your business start off
- Research any government grants that you may be entitled to
- Talk to an accountant, tax agent, business coach and get their advice on financial strategies
2. Too much competition
Regardless of the type of industry you’re in, there is always going to be competition. Take some time out to do your research and know who your competitors are, what products and services they offer, how they market their business and pricing. Take notice of what they are doing well and how your business can take on the marketplace.
Want to stand out from the crowd? Try these tips to stay ahead of the competition:
- Provide a product or service that caters to a niche market
- Focus on delivering exceptional customer service which will help build a loyal customer base
- Don’t be afraid to do business differently, do what works for your business model
3. Poor work-life balance
One of the concerning risks that many SME operators face is the sacrifice made to mental health and overall wellbeing. That’s why it is vital to address the issues of working excessive hours. Know when to switch off and creating clear boundaries between work and home right from the very start.
Try following these tips to help manage the work-life balance seesaw:
- Start the day with exercise, not checking your emails. Allowing your mind and body to wake up properly without reading emails is a small step you can take to reduce stress.
- Get organised by using scheduling systems, calendars and to-do lists. Having a clear outline of what your days and months ahead are going to entail, helps with time management, making tasks feel a little less overwhelming.
Take your holidays and get away from the daily grind, whether it’s a few days or a week, set aside the time to reset and recharge.
4. Doing it all alone
A common problem that SME operators make when starting up is trying to do everything themselves. Don’t be afraid to seek assistance when you can to help. While the finances may not be there yet to hire a full-fledged team, there are ways to alleviate the load and make it manageable.
Consider the following options:
- Setting up a virtual assistant to help manage admin tasks
- Outsource tasks where you can, like accounting, marketing and IT
- Have a chat to mentor or business coach to get some advice and guidance on your business journey
5. Getting customers
Driving business and getting customers to buy your product or services should be a priority when starting your own business. But what happens when the doors are open but the tills aren’t flowing? Consider driving customers to your business with these tips:
- Invest in promoting your business through social media channels, email marketing and putting some money behind Google ads.
- Understand who your customers are, what they’re interested in and create specific targets to attract them to your business.
- Offer vouchers, discounts and offers to help drive traffic. It’s an option for both businesses that are purely online and those that operate face to face.
6. Not having insurance
The costs of starting your own business can quickly add up. You’ve invested hard-earned money and time in your business, so it makes sense to protect it for the long haul. The risk of not having business insurance could spell disaster. If you were uninsured and a claim occurred, the impact on your finances could be devastating and even potentially end your business journey for good.
Here are some things to keep in mind when sorting out your business insurance:
- Identify the potential risks to your business and only get the cover you need. There are plenty of policies on the market, so make sure you get the appropriate kind of coverage to suit your business.
- Check that all your business activities are covered.
- Check that you have enough cover in place. There’s no one size fits all when it comes to insurance with different levels of cover available to suit your unique business needs.
- Understand the terms and conditions of the policy wording, including exclusions and the claims excess .
Need help arranging your business insurance?
Jump online or give us a call at BizCover to experience insurance made easy. We do all the shopping around, providing multiple quotes from some of Australia’s leading insurers in minutes.
