When starting out in business, many new owners are prone to certain mistakes that can cause their young companies substantial problems. Companies can even fail due to these missteps. While many mistakes are more nuanced, varying by industry and circumstance, a number are quite common and easy to avoid. To give your new business the best chance of success, be sure to avoid the following potential pitfalls.
- Anticipating that revenue will start sooner than is the case. On its own, thinking that revenue will start more quickly than it actually does is a mistake with minor consequences. The real problems arise when new business owners make plans for supporting themselves or staff through revenue that doesn’t materialize when originally expected. To give your business the best chance of success, be conservative in your revenue figures and forecast for when you expect money to start coming in.
- Trying to grow too fast. In business, biting off more than you can chew can be disastrous. Sometimes this mistake stems from thinking revenue will start sooner than it does, while other times it originates with assumptions that revenue will grow faster than is the case, or even just outsized ambitions that cause a small business owner’s reach to exceed their grasp. At any point in business, but especially early on, it’s important not to think about growing too fast. Aim for cautious, measured growth. One particular area to look out for is staff size: think very hard about every hire early on. Consider using HCM software to manage your HR, as this can save you money. You can find HCM systems at TEC, so you can compare all of the different systems available. This will make it easier to hire the right people, meaning you can retain all of the top talent that will progress your business for you.
- Committing too many resources to large capital investments. One of the biggest mistakes new business owners make is immediately spending top dollar for brand new tools, equipment, or software. In many cases, founders think these investments will help set their businesses apart from competitors, but they often find that all they’ve done is shorten their staying power. Instead of looking for the latest and greatest, seek cost savings for equipment and other tools of your trade. Try to buy second-hand when necessary; leasing can be an even better option. Slightly older or refurbished versions abound in many businesses. They don’t need to last forever – just until your business is established and more capable of affording top of the line capital expenditure when necessary.
- Spending to try to look established. A common mistake among small business owners make is thinking that if they spend more, they’ll look more established; as if potential customers were monitoring their spending habits. The fact is that they aren’t; so, business owners need not pay top dollar for marketing when first starting out, or take on the obligation of expensive office space before it’s necessary (if it’s ever necessary). Marketing efforts will change over time as you become more aware of changing customer perceptions and needs. Your company’s needs regarding office space will also change, both in type and size. Don’t make the mistake of committing your company (or yourself) to expenses early on that aren’t absolutely necessary to start and grow your business while conserving resources to sustain yourself.
- Don’t skimp on professional services. In the early stages of your business, there are a few areas where it’s absolutely necessary to have things done properly from the outset. Legal work, staff training and accounting are two areas of your business that, if done poorly or not at all, can cause more problems in correcting than the expense of doing it right from the beginning. In both of these areas, there are too many potential mistakes that won’t just hurt your bottom line, but drive your business into bankruptcy. Especially with regard to accounting (tax accounting in particular), requires a professional with right the right mix of insight, strategic thinking and technical skills. By going to the right firms (like HLB Mann Judd) you could get in contact with some of the best Tax Accountants Brisbane has to offer and this in turn is going to help your business in the long run. While it’s smart and even necessary to look for cost savings in the early stages of a new business, don’t make the mistake of failing to have accounting or legal work done correctly from the outset.
Small business owners have many obstacles to face before achieving success. Aside from proving their concept, developing a market, growing production, managing resources correctly and providing proper oversight; even before any of these things, there are plenty of potential mistakes that owners can make that can hold back or kill their new venture. In order to give your business the best chance of success, be sure to avoid these mistakes when starting out and keep your eyes peeled for other potential pitfalls.
Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.