Common Mistakes New Business Owners Make

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Common Mistakes New Business Owners Make

Starting a business comes with serious perks and downfalls. We all like to think of the benefits: setting your own hours, meeting important goals, not having to deal with unlikeable bosses and making a lot of money. But we also have to think about upcoming responsibilities critically.

Ignoring them from the get-go can give you a lot of headaches in the long run. Worst case scenario, they’ll ruin any progress and could push you towards certain failure. 

That being said, you shouldn’t be crippled by worries when you start off. Being aware is helpful, but pushing yourself to the extreme can do more harm than good. After all, a good CEO is able to evaluate possible downfalls while stirring the business in the right direction. 

Whatever you do, if you’re ready to start then don’t discourage yourself. Identify issues early on and work from there. Here’s what you shouldn’t do!

1. Not Planning: Business, Marketing, Financial

Man looking over business plans on desk.

Having an idea is great! It’s the first stepping stone but no new business can live off of just dreams and wants. You likely already know what you want to sell, either products or services. The next step is structuring your company.

The sooner you try to figure out our departments and who you need to hire, the better. While you’re at it, taking a look at marketing materials is just as crucial. You don’t want to be caught unaware or unprepared. 

Finances are just as critical. First, you need money to get started, and knowing exactly how much from the very beginning can help your planning phase. If you find all of these things tedious and confusing, do some online research at the very least. Advice should always be welcome, especially when coming from a credible source. 

Owning a business means hard work and how you start off is going to dictate how you’ll evolve. 

2. Not Thinking about Your Customers

Know your customers on tablet.

Thinking that your goods and services will be loved by everyone is a sure-fire way to start off on the wrong foot. Sure, you’re going to want to reach as many potential customers as possible, but keep in mind that focused efforts are more worthwhile in the long run. 

There’s a huge difference between marketing for teenagers and retirees. Think about what platform you’ll use to advertise your business and why. Do you have the money to cater to both age groups as you’re starting off? Chances are, these things will come with time so don’t let it discourage you. Focusing on what you have is key. 

Expanding along the way could be one of your goals, don’t make the mistake of stretching your business thin. It’s very important that you put everything you have into reaching the right audience, otherwise, your voice will be lost and ignored. 

3. Not Having a Clear Budget and Goals

Blue budget planning binder.

If you have money set aside for your business, that’s a great start! But you shouldn’t rely on using the money whenever you want, for whichever purpose. This can easily turn into trouble if you’re not careful.

Before you know it, you’ll be looking at an empty account before even covering all aspects of your business. And then what? It’s best to just avoid this issue completely.

Your goals should be clear but realistic. If you’ve previously worked in the industry then you should have a pretty good idea of what to expect. If not, there’s no shame in reaching out and researching. Once you’ve settled that you’ll be much more focused on the following steps. 

4. Making Big Purchases Very Early On

Man with a lot of money in front of him.

Unless you absolutely need to, avoid making big purchases when you’re starting off. Being overconfident can be your downfall, so don’t stack up on goods you’re not certain you’re going to sell. If something goes wrong you’ll be at a loss with no means of focusing on what your business needs next. 

This tip doesn’t just cover products, though. Buying a company car is important, but think about why you’re buying one. Does it need to be the biggest, latest model or can you carry out your business with something more subtle?

Ad campaigns are also something new business owners flock to without really thinking of scales. Of course, you’d want everyone to hear about what you have to offer but don’t overdo it. It’s better to build up and adjust along the way!

5. Not Evaluating Your Product Right

Product vs price balance chalk drawing.

Underselling and overselling can seriously harm you. The first can put you into the red immediately while the latter will send your customers towards your competition. Finding the perfect balance can look impossible at first, that’s why budgeting and planning are crucial. 

You have to remember that time is the most valuable currency there is. Take this into account when pricing your goods or services. Comparing the market should give you a good idea of where to start.

If you’re coming up with deals, put yourself in a customer’s shoes. What would you like to save on when buying? If you offer up something insignificant to most of your clients, they’ll likely just ignore it and search for something better. 

6. Not Saving Money up for Emergencies

Sack of savings with shield.

When disaster strikes, it hits hard. Covering yourself in case of emergencies is a must. Even if you’re not doing quite as well as you’d like, dipping into savings is a very bad idea. You can’t ever know when you’re going to need that money, and you’ll be grateful for it when the time comes. 

Make a list of everything that could go wrong, no matter how unlikely it seems. Environmental damage should be high on the list, as is theft. If you’re stressed about putting too much or too little on the side for emergencies, thinking about why you need to do it should help.

We tend to take issues more seriously when we stop thinking about them in an abstract way, after all. 

7. Avoiding New Techniques and Technologies

Old technology on a desk, old computer, keyboard and floppy disks.

As much as we sometimes scoff at new technologies, in particular those revolving around social media, we have to accept them. Traditional advertising can help but the internet will put you on the map.

The days of leafing through newspapers for your needs are long gone and we shouldn’t be upset about it. We should try to embrace whatever the world wide web has to offer even when it seems daunting. 

If you’re not particularly versed in setting up your own virtual corner we highly recommend hiring someone to do the work for you. How you market yourself can have an effect on who wants to hire your services, and when you have a dedicated page you’ll double the chances of being seen. That way, no matter who your clients are, you always have the possibility to expand. 

Of course, new technologies can encompass far more than what we’ve listed. A willingness to be open will more than help you on your way to success. 

8. Doing It All Alone

Old woman alone with business papers.

Your business is like your baby, we know! You want what’s best for it and you might be convinced that you have what it takes to do it all alone. The truth is, if you want to offer your services without forming a team, we encourage you to lean towards freelancing instead. 

A business is not a one-man or woman team. It requires people from different backgrounds with different skillsets to work together. Your entrepreneurial knowledge will help bring them all together and while we know the first instinct is to protect your hard work, it’s important to trust those you hire.

Truth it, nobody is out to get you or ruin your business, though at times it may feel like it, especially if you’re on shaky grounds. Your associates want to thrive alongside you, so give them an opportunity to shine. 

Branching out will also help you to see different perspectives. Too often we get stuck in our own bubbles, unaware of needs and wants outside of them. With the help of others, you can explore possibilities you’ve never even considered before. At the end of the day, your business will thrive because of it. 

9. Overspending

Desperate man looking at bills.

Too many of us make basic mistakes when it comes to money. One frequent issue is spending money as soon as we get our hands on it. We do that to avoid insignificant temptations later on. If you’re having trouble the solution is budgeting, not overspending. 

Buy things as you need them when you need them. Investing is crucial, but wasting money on things that won’t benefit you in the near future is a guaranteed way of getting sidetracked.

If you get yourself in a position where you’ve run out of resources but absolutely need to make a new purchase, you’ll feel forced to dip into your savings. As mentioned earlier, you should avoid this.

Better planning should set you on the right path. Eventually, this will come naturally as time goes by. 

10. Not Investing

Desperate man looking at tablet.

The flip side of what we’ve just discussed is not investing in your business. If you’re doing well and you’re comfortable with where you are, we encourage you to do a little bit more research and start investing.

Stagnant businesses can disappear out of the limelight if nothing new is brought to the table. You definitely don’t want that happening to you!

Consumers love businesses that evolve and fulfill their needs, so get planning! 

Consider the fact that new technologies and techniques come up every day. It’s particularly easy to get lost in all the information. For the good of your business, take some time to research. Don’t go overboard, there’s no need to restructure your whole plan just because something sounds flashy. Stay true to your business plan but always seek ways to improve. 

11. Mismanaging Tax Obligations

Pointing at watch, running out of time.

When tax season is upon you, you’ll do well to arm yourself with patience. As a business owner, it’s your duty to care for taxes appropriately. Keep in mind they’ll differ from what you’re used to as an employee, so don’t do them last minute. 

Better yet, if you’re able, consider hiring an accountant. With this extra help, you’ll have the necessary time to take care of business as usual, avoiding the stress of extra paperwork. Accountants will also know exactly what needs to be done and how so on top of freeing you from worries you’ll also avoid any confusion.

At least until you’re better equipped to understand the process, we highly recommend this option. If you don’t have the necessary funds make sure you’re well informed come April. It’s always a good idea to prepare ahead of time. 

12. Being Impatient

Impatient woman at desk, waiting.

If you think your business will boom the moment you open up, we don’t blame you. If you have all your affairs in order, why wouldn’t it all work out for the best? Well… nothing happens overnight. Unless you’ve put quite a lot of money on marketing, chances are your clients will trickle in one by one.

And that’s okay! It doesn’t mean there’s anything wrong with your business or that you need to start over. It just means people need more time to become aware of your presence.

Being impatient can and will stress you out. Not being in the right mindset could lead you to unfavorable deals and changes. 

We recommend keeping an eye out on developments as is natural. Give your potential clients the chance to get to know you instead of forcing a relationship. 

13. Not Having Written Agreements

Man holding a contract up to sign.

We all want to believe the people around us can do no harm. And wouldn’t it be great if we could trust everyone we crossed paths with? But let’s be honest, everyone’s looking out for their own skin. Some people may even have malicious intent and we wouldn’t even know it unless it’s too late.

How to avoid shady individuals? Don’t take anyone’s word for anything, no matter who they are. A good business owner will put down agreements in writing and if someone’s not willing to sign, step away. Some might even guilt you into forgoing documentation altogether on the basis of friendship, but real friends that have good intentions wouldn’t think twice about it. 

Look at it objectively. If they truly don’t mean you any harm then why wouldn’t they agree to a signature? We think it’s best to avoid any such scenarios altogether. 

14. Offering Something in Return for Exposure

People making a deal at a business table.

Piggybacking off what we mentioned earlier, don’t take up jobs or offers in return for exposure. Most of the time it’s never worth the time and effort. Those who offer such ‘deals’ just want to save a couple of bucks. 

Exposure can be great but if you’re already using the appropriate tools to get your name out there, don’t rely on others to do the same.

Only you know what your services are worth so don’t cut yourself short. Not to mention these practices can lead you down the rabbit hole. Once someone expects you to take up the deal, how likely are they to pay you the second and third time around? 

In these scenarios is best to look for clients elsewhere and focus on actual sales. 

15. Bad Hiring Practices

Bad employee playing at desk.

Being mindful of who you hire is key. If you have friends or family members that need jobs it’s up to you to take them on board or not. But do so based on skills and not on obligation. If you don’t think they’re right for the position, respectfully decline their application. If you have the time and resources to train them, we say go for it! 

Watching someone grow under your guidance is a phenomenal thing, so if you can, invest in your employees. They’ll be happier for it and their gratitude will show in the work they put in. You shouldn’t turn your back on young people who need experience, but also keep in mind that you might need a couple of experts in the room too. 

There are many things to keep in mind while hiring and you’re ultimately the best judge. Our advice? Stay open to any possibility and pick people that are right for you and your business. You don’t owe anyone a job, but you never know what kind of diamond in the rough you could come across. 

If you’re a business owner, share some of your tips and tricks! Let us know down below if you wish you knew any of these things before starting off. Better yet, tell us what disasters you avoided precisely by implementing these rules!

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