by Cody McBride
Starting a business is an amazing life milestone, empowering you to become your own boss and ditch the nine-to-five grind. While it’s exciting, entrepreneurship can also be challenging at times. First-time startup owners in particular are prone to certain mistakes that can detract from their success. Discover some of the common errors made by newbie business owners and how to avoid them below.
Selecting the wrong type of business entity
When establishing a business, it’s helpful to register it as a formal legal entity with your state. This can help protect your personal liability in case of legal troubles, for example, and will simplify your bookkeeping and tax filing in the future. Different business entities have different tax obligations and reporting requirements, so do your research into which one suits your needs. Options include an LLC, corporation, and S-Corp, among others.
Neglecting to write a business plan
A business plan is like a guidebook to how your business is run. It covers everything from a product and service description to ownership details, financial projections, and a marketing plan. Sketching out a business plan in advance will streamline operations and save you headaches later. You can also use a business plan for practical purposes like getting investors on board. These free templates can help you draft your plan.
Incorrectly calculating startup costs
A lack of money can quickly derail your business when you’re getting it off the ground. To avoid this nightmare scenario, make sure to accurately calculate your startup costs. Chase Bank provides a guide to getting it right and includes a list of expenses to consider, like commercial rent, inventory, marketing, business licenses, and payroll. Once you know how much money it’s going to take to start your business, you can secure the requisite cash.
Refusing to invest in technology
Some entrepreneurs assume slashing technology costs will help them reduce overall expenditures. While it might result in short-term savings, this is rarely a good idea. According to Core PHP, investing in good tech tools can ultimately save companies time, manpower, and money. In addition to hardware like computers, useful software can include project collaboration tools, document storage systems, and payroll technology.
Failing to establish well-defined business processes
Clear processes provide clarity for your business’ employees and yourself. When you’re running a company, there are a lot of moving pieces to keep track of. Miro’s Process Map Template lets you stay on top of everything as you breakout your project into stages. You’ll have all the important tools in a single framework, so you can accurately survey your business’s needs. This will improve your problem-solving abilities as an entrepreneur and allow for smarter business decisions.
Not creating a cohesive marketing plan
If your business is going to be a success, it needs to grow. For this to happen, you need to consistently attract new clients. Marketing is the key to raising your profile and driving growth. If you’re not a marketing pro yourself, you may have no clue where to start. Don’t stress. There are experts who can help. Financial Potion provides a variety of marketing solutions, from high-quality video productions to social media placement.
Trying to do it all yourself
Finally, one of the biggest mistakes made by novice entrepreneurs is trying to do it all themselves. It can be hard to entrust other people with core tasks at first. However, you have to learn to delegate and trust your team. Otherwise, you put yourself at risk of entrepreneurial burnout. This can leave you in a state of dread at the thought of going to work or make you apathetic about your business—the last thing you want.
When starting a business, thinking about potential mistakes might not be that inspiring. However, educating yourself about possible pitfalls is the key to avoiding them. The above guide provides some highlights.
For more resources about finding success as an entrepreneur, check out the Financial Potion blog.