collaborative post | Starting a new business from the ground up is stressful. Ask any business owner. The day they put their plans into place to make their business a reality is the beginning of a stressful period, not to mention much second-guessing and worries they have done the wrong things.
But self belief issues aside, there is no denying that there are a plethora of mistakes new business owners can make, and all of these poor early decisions can be costly down the line. If you are planning to be one of the 800,000 new businesses set up in the UK each year, this post has some common mistakes business owners make so you can avoid them.
No Business Plan
Even if you started your business, sat at your laptop and fell into or turned your passion for crochet into a business seemingly overnight, there is no reason why you shouldn’t have a business plan.
A business plan is your business blueprint and allows you to put your aim, objectives, desires and future goals in one place to help you run your business and keep things on track.
It doesn’t need to be long or detailed; it can be in a notes app on your phone, a napkin from the coffee shop or a post-it note on your desk. It simply needs to exist in some form for you to refer back to and expand on.
No Financial Planning
Granted, some more modern businesses or freelance careers don’t require any initial outlay or funds to keep going. But these are few and far between. Generally, you need funding, and a good cash flow to help you get going, and neglecting this aspect can spell disaster for your venture.
Think about how much you need realistically to get up and running, how long it will be before you turn a profit, what your account receivable collection period needs to be and your operating costs going forward.
An excellent guide to stick to is having 12 months of operating funds in a contingency fund to help you keep going and cover any expenses you might not be earning enough for. This allows you to take the pressure off while knowing you can still do what you need to do.
Avoiding Business Loans for Big Ticket Purchases
While you don’t want to rely extensively on business loans and borrow outside your means, you shouldn’t avoid loans altogether. Using your cash flow to buy expensive equipment or machinery isn’t cost-effective. In many cases, offsetting this payment with a loan can help you keep your cash off when needed while still making the purchase you need to make.
You are not alone in starting your business. Millions of people have done this before you, and many organisations set up expressly to help new business owners get support through mentoring, advice, networking or financing options such as grants or tax reliefs.
You need to be looking for the help available for you and using it to your advantage, even if it’s a coffee meeting with another business owner to discuss ideas or get support. Don’t shut yourself off or think you know because this can be harmful to your success in the long run.
Not Monitoring Your Progress
It’s all good and well making a business plan, putting forecasts together, and analysing your position. But what is the point if you aren’t keeping up to date with this or checking in on how you are doing compared to these goals? Your business needs to have a point and goal; without it, you are risking everything you have worked hard to build.
Make it a point to assess your business plan regularly and ensure you are still working towards those goals. If not, then adjust them and get back on track, but you’ll never know if you don’t come back to them.
Getting Pricing Wrong
The pricing you set will set the standard, and you need to get this right. When working in retail, you will generally work on your supplier price and the recommended retail price to help you to do this.
Following industry standards can allow you to look at what others are charging, what the going rate and how this can apply to you. Both over and underpricing will be detrimental in some ways.
Hence, you need to take your time in coming up with prices to ensure they are precisely where they need to be to allow you to remain competitive without undercutting yourself or pricing yourself out of the market.
Thinking You Know It All
Put it this way; you know what you know, and you can’t know anymore if you think you already know everything.
Remove the ego from the equation and accept that while you might know some things about your industry, you do not know everything, and if this is your first business, you likely don’t know what it takes to run a successful business.
Don’t be afraid to take feedback and suggestions. Allow yourself to be open to other people’s ideas and learn to form their mistakes and experiences to avoid making them yourself. The more open you are to learning new things and putting this into practice, the better you will be at running your company.
Marking can often be an afterthought for many business owners, but this is a big mistake. Your marketing needs to be done from the beginning, even before you are ready to start trading.
You need an excellent combination of traditional marketing methods that work for your business and industry and modern digital marketing methods, too, such as SEO, social media accounts, PPC, email marketing, and more. This way, you can generate a buzz and get the word out so you can hit the ground running when you are good to go.
Making mistakes as a new business owner is part and parcel of running your first business. However, there are some mistakes like the ones in this post that you can actively avoid, so they don’t put you on the back foot.