There are many benefits to starting your own business. People love doing what they are passionate about, all day every day, and answering to no one but themselves.
However, starting a new business is never easy. There are so many things to take into consideration and decisions to make that mistakes, unfortunately, are inevitable, even for the best-prepared entrepreneur.
Even though there is no guarantee of success and profitability for any start-up, there are ways to maximise your potential for success. You should be aware of these five common mistakes that many small businesses make in their first year and how to avoid them:
1. Taking too long to start
It’s a fast-paced world out there and if you are presented with new opportunities that seem beneficial; seize them. If you take too long to start your business you might be giving your competitors a chance to get their foot in the door before you can even make a move.
Of course, the length of time it takes to start a business generally depends on the type of business in question and its complexity, as well as many other factors including location. If you are concerned about diving in headfirst without a plan, then take a step back and weigh up all the pros and cons. Just remember that sometimes it is worth starting your business a little sooner to gain that extra advantage. In other cases, careful planning may be more suitable.
2. Choosing the wrong company structure
Company structure, also known as corporate structure, refers to how different departments and business units are organised within a company. When setting up a new business, it is natural to focus on expected profitability and anticipated future growth. However, it is equally important to focus on company structure.
Choosing the wrong company structure can cause severe tax and legal consequences. On the contrary, the right structure can provide you with substantial value in terms of asset protection and minimised income tax imposed on profits.
3. Not investing in marketing
We all recognise the importance of investing in retirement, savings, and even health. Similarly, you need to invest in your business if you wish to dramatically increase revenue and drive growth. This is where marketing comes in.
In order to generate customer interest for your product or service, they have to be aware of what it does and how it works. Not only does marketing help to build brand awareness but it can also increase sales and boost customer engagement.
That being said, entirely neglecting your marketing will pretty much ruin your chances of sustaining your business’s presence and ensuring its growth year after year.
4. Not planning out your cash-flow
Statistics show that more than 50% of businesses fail during the first year. And one of the most common reasons cites is cash-flow issues.
When developing new business, collecting payments is probably the last thing on your mind because all you want to do is to establish your presence in the market. However, burying your head in the sand can wreak havoc on your accounts receivable, thereby putting you out of business very suddenly.
In order to avoid such problems, you must manage any unpaid invoices so that they don’t pose a risk to your business. Make sure to chase up all accounts receivable. It’s not bossy, its business.
5. Trying to do everything yourself
No matter how large or small a business is, it involves various tasks, and you will not be great at all of them. After all, no one is perfect.
During the early stages of your business, it can be tempting to want to get things done to your standards – especially if you have limited resources. However, trying to do everything yourself is not commitment. It is bad management and it will only cause harm to your business by slowing it down or producing poor quality work.
For this reason, learn how to delegate tasks to people who share your passion, and use your best skills to their advantage. As the saying goes; in union, there is strength.
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