Starting and running your own business can be tough which is probably why so many fail within the first few years. There are many missteps people make while establishing and running their business that can lead to failure. We’ve listed the top 10, in no particular order, so that you can learn from the business mistakes of others.
- Partner Problems
Having the right partners in your business can be a make or break situation. This not only involves having the right person as your business partner, it also means having the right structure in place to ensure you minimize personal liability. Having the right external partners such as accountants and bookkeepers, lawyers and mentors, is just as important to ensure you’re receiving the right advice when you need it.
- Money Problems
Many business owners fail to fully appreciate the difference between profit and cash flow, which can lead to difficulties making payments to suppliers or even covering staff wages. That’s when you need to have a robust cash flow forecast in place along with a plan for managing various best and worst case scenarios.
- Lack of Control
Not having the right back-office systems and procedures in place can mean the difference between success and failure for most businesses. If you’re not sure how to do this or what systems should be documented, get some help from someone who knows what they are doing.
- Lack of Vision
Do you have a plan in place for your business’ future? If not, you are really ‘flying blind’. At a minimum, you need a business plan, financial plan and marketing plan. Again, seek expert advice if you need assistance with putting these together.
- Wrong People
Having the right staff in the right roles can be a difficult task for small business owners but it is vital for success. Just as importantly, you need to ensure you have the right customers; anyone who is a perpetually late payer or who only makes small or irregular purchases you might be better off losing.
- Wrong Advice
Getting advice for your business is important but you need to weigh up the quality of the advice you receive and assess whether it comes from a credible source. Try to get multiple opinions and don’t necessarily take everything at face value.
- Underestimate Competition
While you shouldn’t be obsessed with your competition, it always pays to be aware of who they are, what they are doing and why your products/services are better.
- Underpay Yourself
Make sure you pay yourself a decent wage based on the market average rate for your position. Many business people only pay themselves a basic wage so that they can have enough capital available to help grow the business but this is a mistake as it often leads to owners dipping into the business’ finances to cover personal expenses.
- Avoiding Risk
While you shouldn’t take unnecessary chances, some risk is unavoidable if you want your business to grow. This might involve launching a new product or moving into a new market; if you have the right fundamentals in place, you can minimize adverse consequences.
Getting the balance right between spending enough on your business and splurging on unnecessary luxuries can be difficult. Instead, get expert advice on what will provide the best value for money for your business.
We all make mistakes and, while you might not be making all of these in your business, any one or a combination could be costing you money and may even result in the enterprise failing. Being aware of them and working to make informed decisions in your business will ensure all the contingencies are covered.
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