Starting your own business is a bold and exciting move, and for many, it’s a way of achieving freedom from working for someone else. However, many small businesses fall at the first hurdle, often by making the same common mistakes during their first year. Here are some of the pitfalls to watch out for and avoid when you’re taking your first steps into the world of running your own business.
1. Not bothering with a business plan
You might think you have a clear idea of where your business is going, but not bothering to write a business plan can quickly lead to small businesses drifting or even failing. Business plans are useful not just for achieving clarity about your vision and how you’ll achieve it, but also for showing to banks and potential investors if you’re on the lookout for funding. What’s more, they force you to analyse your competition, helping you work out how you’ll differentiate yourself in the market.
2. Hiring too soon
The nature of business is that some periods will be more hectic than others, and it can be tempting to think that you need to hire full-time staff as soon as things start getting busy. The trouble is, having taken on staff – and all the responsibilities and expenses that go with that – during a peak, you’ll land yourself in trouble when you get to the troughs, when you’ll have employees to pay but no work for them to do. If you do need extra help, taking on temporary staff or freelancers gives small businesses more flexibility while they are in their infancy.
3. Borrowing too much money
You have to fund your start-up costs somehow, but getting into lots of debt from the outset isn’t a good idea. Not only does it mean that any profit your business starts making is immediately swallowed up by loan repayments, but it also means you’ll be paying even more in interest. It’s better to save up some money and make do with what you’ve got when you first start out.
4. Not keeping records
Record-keeping is an essential part of running a business, but in the early days when you’re rushed off your feet and trying to do everything yourself, it’s easy to let it fall by the wayside. You need to make sure you have accurate records of all your income and expenditure, and the best way to stay on top of everything is to keep recording these as you go along. Otherwise, when it’s time to submit your tax return, you’ll find your paperwork in a state of disorder and chaos, and your accounting will be far more stressful than it needs to be.
5. Not getting insurance from the word go
It’s understandable that many new business owners want to keep costs to an absolute minimum in the crucial first year, but business insurance is one thing you can’t afford to go without. Should anything unexpected befall your business in its first year, whether it’s a member of the public suing you or a fire at your premises, your business could be pushed under before it’s even had a chance to get going. Fill in our form to get a quote for business insurance today.