Thinking about starting a business? Avoid these 6 mistakes

The path that takes you from the first sparks of start-up inspiration to business success is probably not going to be a straightforward one. Starting a new venture can be hectic, and it can often be all too easy to look over or miss important areas. To help you plan and avoid obvious mishaps, we’ve put together a list of some of the top mistakes new businesses make.

Not having a solid business plan

When you first formulate an idea for a business, it can be tempting to act on impulse and try make your vision reality as soon as possible. However, not setting out clear steps to follow when starting your business may result in a business blunder. Until you draw up a business plan, you’ll have no idea whether your business or start-up idea is sturdy, or even viable. Market research should form the core of your business plan, and you should ask yourself a few questions about what your business will be providing. For example, who is your businesses product or service targeted at, and how large is this demographic? Again, what existing competition will you be running against, and how will you market yourself in accordance to this? As well as giving yourself an idea how your business will progress, formulating a solid plan can also help instil confidence in others who may be able to help you. This is especially true of commercial lenders, who are more likely to help provide funding for your new business if you can prove you’ve taken all eventualities into account in a business plan.

Miscalculating running costs

Drawing up a business plan is very good, but having a plan with incorrect predictions can be a disaster. One of the most common mistakes businesses make when planning is miscalculating the regular outgoings and costs they’ll need to pay in order to keep running. Underestimating how much money your business needs to stay afloat can be a shot in the foot from the outset, leading to you veer away from your original course into damage control. Often, a miscalculation comes from a lack of understanding about supply chain costs. Many business owners simply calculate the cost of purchasing or having a product made, and then offset this against the price of the product. However, wholesale or manufacturing costs aren’t the only things you’ll need to pay when providing a product. You’ll also need to consider tax rates, logistics, and marketing when considering what price to charge for a product, otherwise you could end up making a loss.

Not securing funding

Some new business owners also make simple mistakes when deciding how to initially fund their operation. Many of those who choose to self-finance the costs of a start-up soon find that their source of money dries up, causing an emergency search for new and quick sources of funding. Securing a business line of credit to support your business in its first steps is recommended. As well as the extra cushioning outside funding can provide, it can also act as a vote of confidence towards your business. Whether you’re looking for funding from a commercial lender, independent investors, or the general public, securing money from an outside source shows that others trust your business plan enough to invest in it. This is particularly true if you’re looking towards high street banks for a business loan, where a solid business plan is often needed before lending is even considered.

Not seeking advice

When you’ve formulated the idea for a business yourself, it can be tempting to try and go it alone. However, whatever your level of experience, it’s recommended that you share your plans with others you can trust. Until you let others in on your plans or ideas, you’ll have no idea how successful they might be. It may be that you’ve overlooked essential components in your business, funding or market research plan; oversights which others may be able to advise you on. Again, if you’re unsure of the best way to fund your business, or how much money you’ll need, getting some advice from a business finance professional is a good idea. Most banks offer business finance services, where you’ll be able to get a proper consultation with an advisor about the best route to take.

Misjudging your property requirements

There’s a lot to consider when setting up a base for your business, and over or underestimating property requirements is a common mistake. This is often caused by overconfidence, with many start-up and new business owners investing in property without thinking about the near future. When considering property, you should firstly consider the size and structure of your business. If you’re a sole trader or have limited staff, and don’t provide a services where consumers need to directly engage with a premises, running your business from your own home is always an option. This cuts on your initial costs, but also leaves legroom if your business plans don’t quite work out. Choosing to lease a premises at first may also be a good idea for small businesses, with many banks providing options to help finance property used for new ventures. This way, you can spread payment for property over a set period, and also move into different property without the hassle and stress of selling.

Not anticipating change

Think of a business plan like blueprint for a house. Without a blueprint, building up your house will be confusing, messy, and almost destined to end in failure. However, with a blueprint, building your house will be a simple step by step process, resulting in an intact and fully formed shell. However, every once in a while you may need to redecorate, renovate, or repair your house; not doing so may leave shabby and in disrepair. The same is true for businesses. Being resistant to change, and not moving with industry, consumer and financial trends may leave you providing a product or service that is no longer commercially viable. This is true whether your business is plodding along or booming. At any point, there may be a time when the health of your enterprise depends on a change, whether this is a change of the service you provide, the staff you employ, your premises, or your marketing strategy. You might that that your business idea is destined to be a success, but as this article shows, mistakes are often all too easy to make. We hope that the points in this article have been useful, and that they’ve given you some help in planning and preparing your new business.