Everyone loves your great idea for a new small business. The enthusiasm surrounding your idea finally foments into a detailed business plan. You’re ready! New business owners can blindly move forward and walk the same path as so many small business owners before them. This means making the same mistakes they made. These common mistakes could cost you your small business dreams.
Don’t quit your day job so soon. Many new business owners want to invest 100% of their time in their new business and there is nothing wrong with that. The problem is that they usually run out of money as a result, which is not good for their personal finances, nor for the new small business they are starting. The facts speak for themselves. One-fifth of all small business startups fail within the first year. Only one-third survive ten years or more. Don’t make this common mistake. Make sure you have enough money coming in personally to cover your business expenses for the first year.
Your new business is really taking off and you are getting a real branding in your region. That is very exciting. This excitement can be a double-edged sword. You may want to get your product or service into other areas too soon. Expanding too soon without the real capital to cover the costs ends up to be the second biggest mistake new business owners make. Don’t be another statistic and plan carefully for any expansion. Don’t expand too soon. It could cost you your entire business.
Don’t expect customers to just find you. You’ve built a great small business. You offer a great product or service. Don’t skimp on advertising with the expectation that people will just find you somehow. Work on your marketing campaigns. Work on your branding campaigns. Above all, don’t skimp on advertising.
Many small startups overlook legality. It is easy to be a sole proprietor and use your social security number for tax purposes, but there is more to legality when running a small business. Make sure your business name isn’t trademarked elsewhere. Make sure to have the proper permits, licenses, and whatever you need in your region to be 100% legal. Making your business legal will not only protect your business name, but your ideas also.
Owning your own business sounds great. “I get to be my own boss!” The problem here is the idea that owning your own business gives you more time and freedom. This is not the reality of starting a small business. The reality is long work hours, working weekends, and always working. Family and friends may not understand the demand of a new startup. You should prepare your family in advance so that they understand the long hours involved. It is one of the keys to your success.
Don’t fall for the sole proprietorship. It may not be appropriate for your business type. You may want to incorporate or get an LLC. In any case, you should consult with your lawyer to know what the best structure for your new startup is. Even though most sole owners dive in as a sole proprietorship, you don’t want your personal assets to be liable for any business debts.
Like a sole proprietorship, using your personal bank account for business is bad business. Be sure to set up a business bank account and keep good records of every transaction. This will help you when you file your quarterly taxes.
Most new businesses change very quickly and morph into the niche over a short period of time. This changing face of a new startup can cost a business in the long run. The best course of action is to research your region with a business analysis. Set in stone what you want to offer your region. Don’t shift too much from your original business plans and ideas. Sticking with your business plan leads to long term success, and will cost your business less money and time in the long run.
In conclusion, think about your product or service and the demand in your region. Make certain your business is completely legal. Create the proper business model from the beginning, especially if you are considering expansion and employees in the future. Prepare yourself for the long hours and the costs. Don’t skimp on advertising and branding. Don’t expand too fast and definitely don’t quit your day job too soon.