Common Business Startup Mistakes
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Common Mistakes Start Up Businesses Make
Unfortunately very few start up businesses make it
beyond their 3rd year. Failure is usually
down to a number of clearly identifiable mistakes, which if small business
owners are aware of, can increase their chances of survival. Here are common
mistakes which small businesses tend to make.
Poor Record Keeping
Some business people are not born administrators; they feel
more comfortable getting out there and ‘doing the business’. Paperwork is
too easy to ignore but can never be put off indefinitely. Sales, purchases
and other expenditure must be carefully documented, so you know whether you
are making a profit or not. Invoices must be issued on time and chased up
promptly if there is a delay in payment. It’s all very well having the sales
but poor record keeping can hold you back. Having your paperwork in order
will also save you time when it comes to your accountant doing your year-end
books!
Insufficient Capital
When starting off it’s easy to decide what capital is
required for fixtures and fittings, machinery and stock. What many new
business owners forget about is the cash needed to fund day-to-day
requirements, i.e. cash to pay expenses before your customers pay you. This
is known as your working capital requirement. Small businesses can fail
because they have insufficient cash to start off to meet these immediate
expenses. If you wish to survive make sure you set aside enough cash to meet
all your needs for the first few months.
Ineffective Marketing Or None At All
You cannot afford to treat the cost of marketing as an
unnecessary expense. A business with no marketing is like waving in the dark
– you know you are doing it but no one else does! There are many ways to
promote your business on a small budget; it’s just a case of being inventive
and creative. Whatever you do, don’t assume that people will quickly know
you are in business – they won’t, unless you tell them.
Ignoring Changes In The Market Place
As a small business owner it’s very easy to get immersed in
your business and not see what is happening around you in the market place.
Always keep your eyes and ears open to what the competition is doing and
what your customers want. Don’t get left behind.
Owner’s Attitude
Attitude is everything in business. Don’t forget that the
real boss in your business is the customer. Running a business may make you
feel important but don’t let this develop into an ‘I am better than you’
attitude. Do this and you will quickly chase your customers away.
Spending On The Wrong Things
Being in business can be exciting, especially as the cash
starts to roll in! However, don’t be tempted to spend it on a new car, a
house or just a good time. If you are to own a successful business then you
have to keep some cash back to fund future growth. A business cannot grow
without cash, so commit to spending business money on the business.
Growing Too Quickly
Surprisingly, growing too quickly can be a problem. You have
to be disciplined enough to only take on work you can handle. If you are
tempted to accept too much you could end up disappointing not only the new
client but also your existing ones. Also, don’t under-estimate the impact
rapid growth can have your administrative burden. As I mentioned earlier,
getting behind on the paperwork can have an equally damaging effect on your
business.
Trying To Do Everything
Finally, the problem most small business owners have is the
fact that everything falls on their plate. Inevitably this is how it’s
likely to be in the beginning, when the limited budget means that staff are
a luxury, but as the business grows be aware that you cannot continue to do
all tasks. There will come a point when you become inefficient and not have
enough time to complete everything in sufficient detail. Taking on an extra
pair of hands will increase your costs but you will be surprised at how much
time will be saved, allowing you to do what you do best – getting the
business in.
Take a look at each of these mistakes and make sure you don’t fall into these traps.
