9 common mistakes to avoid when starting a new business
If you’re like many new entrepreneurs, you’re fired up about your business idea and eager to launch your company into the world.
But it’s worth stepping back and making sure you avoid some common mistakes that plague many new businesses. Making the right moves in the beginning can help you avoid major headaches later on.
1. Neglecting to make a business plan
Many rookie entrepreneurs fail to prepare a business plan. Such a document doesn’t need to be especially long or detailed. But taking the time to chart a business plan will help keep your efforts consistent, serve as a rallying point for your team and give milestones to measure your progress.
2. Inadequate financial preparation and resources
It’s common for entrepreneurs to neglect financial planning and lowball how much capital they’ll need to get their business up and running. The result is often inadequate financing to achieve your goals and/or a cash squeeze just as the business is hitting its stride.
To avoid such problems, be sure to prepare financial projections for your new business, especially for the first 12 months. This can also help you secure financing and investments.
3. Failing to monitor progress and adjust
your business plan and financial projections gather dust. Make them living documents by continuously monitoring your progress and updating your plan and projections.
4. Buying assets with your cash flow
A frequent mistake that can cause a cash shortage is using your operating cash to pay for long-term assets. Instead, when determining how you’ll pay for major purchases such as equipment, machinery or major IT outlays, consider using a business loan that has a term matching the asset’s lifespan. (For example, a seven-year loan for a vehicle you expect to use seven years).
5. Avoiding outside help
Many new entrepreneurs are reluctant to admit they need help. Don’t be shy about seeking a mentor, hiring an outside consultant or creating an advisory board to give you support and ideas.
6. Setting the wrong price
Don’t make the mistake of setting your prices based solely on what the competition charges. It’s important to research your costs in detail for each of your products when deciding what to charge. Also, monitor actual costs as you go to make any needed adjustments.
7. Ignoring technology
Canadian businesses lag their U.S. counterparts in technology investments and that affects our productivity. Be sure to consider how technology could pay off for your business with improved growth, efficiency and profitability.
8. Neglecting online marketing
Be sure to consider ways to harness the marketing potential of the Internet. For example, ads on social media platforms can be a cost-effective and easy way to target specific market segments.
9. Failing to learn
As you start your business, learn from your initial missteps and use them to guide your eventual success. Remember that many winning entrepreneurs failed in their first attempts but came back to thrive after studying what went wrong and improving.