10 Mistakes New Business Owners Make
Stories of small business owners who became successful are everywhere. Big corporations also buy smaller startups for huge chunks of money.
Running a small business may sound easy but you have to put in a lot of hard work, time and commitment. Here are ten common mistakes that you should avoid for your new business to soar.
Failure to Have a Business Plan
A business plan outlines your target market and your competition. It evaluates the capital required to start and run the business as well as the income you can expect. Drawing a business plan is work and it may lead you to realize that your idea is not that great.
Failure to Have a Market Plan
Your marketing plan and your business plan go hand-in-hand. People have to know about your business for you to make money. In your marketing plan, you identify your target market and come up with a way to appeal to them.
Your business will not be successful in one day. Most small businesses barely make profits in the first and second year. Setbacks are common too and you need to be prepared for them.
Small business owners have to keep costs under control. Be as conservative as possible in this area until your business starts making profits consistently. Avoid anything that is fancy or unnecessary. Also, be cautious when it comes to taking debt.
If your services or goods are underpriced, your will lose money despite working hard. Business owners make this mistake when they have barely done research to determine what they should charge or when they are trying to win over customers.
Forming the Wrong Business Entity
New business owners get too eager to run the business that they wait to form a business entity. Alternatively, they may set up a limited liability corporation because they heard somewhere that it is the best approach. Talk to financial or legal professionals and make an informed decision.
Failure to Have Insurance
While a business entity will limit personal liability for enterprise obligations, you will not be protected when someone gets hurt on your premises, when you get sued for defective products or in many other cases. Talk to an insurance agent and know what kind of cover you should get.
Failure to Have a Written Agreement with Business Partners
A written document is absolutely necessary. It should explain the responsibilities and rights of each partner and the terms of leaving the partnership. Do not assume that you can solve issues informally just because you are all friends.
Not Protecting Intellectual Property
The logo and name of your business are intellectual property which may be eligible for trademark protection. The same goes for any inventions, music, software or artwork that you produce.
Doing It All Alone
Entrepreneurs are usually self-reliant people. However, it is important to know your limits. Learn to delegate some tasks and focus only on what you love and are good at.