Launching a new business can be thrilling and also scary at the same time. While you might be excited to bring your vision to fruition, there is the fear of the unknown. You might find yourself questioning whether your venture will succeed if people will buy your products, how to market, and so on.
Such questions and fears are necessary because they help you prepare for potential risks and avoid obstacles that might block your success. In this article, we share some common mistakes that new entrepreneurs are prone to and how you can avoid them.
Not having SMART goals
Statistics note that 80% of small businesses avoid or forget to set goals for themselves. Unfortunately, not having goals for your business is not a smart business move. Goals give you a sense of direction and keep you on track during the day-to-day operations. Identify where you want to go, what you want to achieve, and outline the specific steps that will enable you to get there.
Not sticking to a budget
The importance of having a tight and robust budget cannot be stressed enough. Every business needs a budget. Sadly, when most people get excited about the idea of starting their own business, budgeting is not something they are thinking about. The trick to budgeting is thinking of it as a necessary evil and doing it smartly. Below are some tips and tricks to budgeting for your small business.
- Separate your personal and business finances
- Set aside cash for taxes
- Set aside a contingency fund for unexpected costs
- Round up your expenses
- Create your profit and loss statement
Overspending
As noted earlier, starting a business can be a riveting and exciting experience. However, you must remain grounded in the process and not the excitement of making it all work in one day. Don’t feel the pressure to spend a lot of money purchasing things that might not be necessary for your startup.
Did you know some even borrow from their personal savings and pump into their new business even when not necessary? While it is okay to create a substantial venture, overspending is not the way around it. It is advisable to go for the less expensive but equally viable options. For example, look for the less expensive software, don’t get that office space yet, outsource services rather than hiring, and stick to a budget.
Doing it all by yourself!
Running a small business is anything but easy. There is so much to be done, and most times, we want to get it all done in a jiffy. Despite our good intentions to juggle all the work, it is easy to get scattered and end up getting less done than we intended.
To avoid being overwhelmed and burning out, try to outsource some of the services. For example, instead of being the CEO and the account manager, you can simply hire an experienced virtual CFO to put your books in order. Outsourcing saves you time, money and increases your efficiency. It will let you focus on other areas in your business, rather than having to grapple with handling everything. It will be key in your growth strategy!
Not knowing your worth
Most small business owners think that undervaluing their products and services is the best way to penetrate the market, promote the product and drive volume. Sadly, going down that road is not a rational decision but rather another rookie mistake. Underpricing your products undermines the value you bring to the market and your brand image. Keep in mind that your customers are price savvy.
They may begin to question the quality of your product; in essence, this tactic will divert attention away from quality customers. Learn about pricing, do some market research, and then set a price that would satisfy the buyer’s expectations while balancing the company’s volume and margin. Remember, it is a business, and you are in it to make a profit, not a loss.
Not having target customers
Before you launch your business, you must take the time to identify your potential customer base. Have a clear picture of whom you expect to be your potential customers. Most new entrepreneurs sometimes resist defining a target customer base, thinking it might limit the business or reduce potential clients. Well, this is a misconception. Identifying a target customer base allows you;
- See if there is demand for your product or service (are there enough potential customers for your business).
- Tailor your products and services to meet your customers’ needs and desires better.
- Target your marketing efforts to reach your potential customers.
- Craft your marketing strategies appropriately.
Shying away from marketing
Without proper marketing, your business cannot succeed. Well, your business can be tossed around once or twice between friends and family, and then you become vapor in the air between them. In essence, without marketing, your scope is extraordinarily limited.
Marketing gets the word out about your business and allows you to connect with potential customers. You can set aside a budget for marketing to enhance your marketing efforts and keep you on track. Luckily marketing strategies such as content marketing, Facebook advertising, email marketing, and guest posting don’t need to cost an arm and a leg.
Not paying your taxes
As a small business, your biggest goal should be to lower your tax bills by not being a victim of tax audits, fines, and penalties from the taxman. As you know, tax issues can be severe and result in huge penalties and fines that could bankrupt your business.
Luckily, most common tax mistakes can be avoided. Simply file your taxes on time, avoid commingling, do not evade your taxes, or hide and transfer your assets. Being on the right side of the law saves you a lot of trouble and money.
Wrapping up
All said and done, creating a successful startup comes with navigating numerous hurdles. Mistakes are part of business; however, those errors that cost time and money must be avoided at all costs. You should try to avoid common pitfalls that might cost you the venture.
