The modern world was built for entrepreneurs. More people are taking the leap to pursue their passion by starting a business of their own. While making mistakes is a part of the learning process, learning them from others rather than repeating them yourself is ideal.
Here are five mistakes to avoid when starting your business, so that you have the best possible chance at success.
Spending Your Entire Loan
There's nothing wrong with taking out a business loan to get you started. However, not planning to use that loan wisely can be a fatal mistake. Too many new entrepreneurs see the sequence of zeros in their bank account after taking a loan and getting excited.
Make a plan for how your loan will be spent and stick to it. Be frugal when spending your loan. Shop around for the best deal in office supplies. Compare Business Energy Rates - EnergyBot is a great resource for this. Just because you can afford an Audi as a company car doesn't mean you should. Leave a buffer for when something unexpected inevitably comes up.
Doing it Alone
When you become an entrepreneur, may have dreams of the business running itself while you relax on the beach. While it is possible that this fantasy could become real someday, there's a lot of work to be done to get you there.
Trying to save money by doing it all alone is one of the biggest mistakes you can make as an entrepreneur. Sure, sitting down and figuring out how to program your own website could save you a couple hundred dollars. However, if you calculate the opportunity cost of what you could be doing instead to grow your business, you'll find that your talents are better served elsewhere.
Outsource your services. Look for a VA just starting their business and looking for experience or work on the barter system to save some money.
Overestimating Your Success
It's great to go into a new business with a positive attitude. There's a lot to be said for visualization and shooting for the stars. However, you need to be realistic, especially when it comes to the financial planning aspects of your business.
Social media has created the illusion of overnight success. Rather than hanging your hat on the idea that you'll own a million-dollar business within the first year, plan to be in the red for the first five. That way, you'll be able to prepare yourself and manage expectations. The worst-case scenario is that you're actually successful right away-- which isn't such a bad scenario at all.
Not Doing Research
A lot of small business owners have a great idea. The idea is so great that they don't feel the need to do market research before investing thousands of dollars into starting a business.
Before you pull the trigger on your business idea, conduct plenty of market research to validate it. If you're planning on starting the third cafe in a small town, how are you going to capture a slice of the loyal market share? While your area may not already have a boutique gym, can the socioeconomic environment support what you'd need to charge to break even?
Taking the time to explore and investigate these topics will save you a lot of time and money down the road. The information you collect will either tell you that the business idea needs work or lay the groundwork for your future marketing efforts.
Not Protecting Yourself
If you start a business under your name without insurance, you're putting yourself at risk. Take the time to create a business entity that suits the nature of your business. For example, an incorporation or LLC will protect your assets should the business fail. Additionally, invest in proper insurance coverage to protect you, your employees, and your clients.
By learning from the mistakes that others have made in the past, and vowing not to repeat them, you can run a successful business from day one.