Running your own small business can be a hugely rewarding experience, both emotionally and financially. For many new entrepreneurs, the allure of being their own boss, managing their own time, and the potential for uncapped earnings is enough to spur them on to hand in their notice and get down to writing their business plan. However, nine out of ten start-ups will fail within their first year of operations, and it’s often down to one of several disastrous mistakes that many new small business owners make. We’ve listed some of the most common mistakes to help you avoid making them.
#1. Mixing Business and Personal Expenses:
Combining your business and personal expenses might seem like a more convenient option, particularly if you are a sole proprietor and run your company from home with minimal costs. However, doing this is best avoided, as it can create more work and expenses for you in the long run when it comes to filing your tax return and ensuring efficient book-keeping. Creating a separate business account, or even using a second personal account to keep business funds and expenses separate will make life easier for both yourself and your accountant.
#2. Borrowing too Early:
Borrowing money as soon as you can might seem like an ideal idea to ensure that you have the funds to get your business off to the best start and improve your chances of growth from the beginning. However, borrowing more than you need can also be a very risky move. Many new entrepreneurs become too caught up in the big picture of business growth that they borrow too much money early on, leading them into repayment problems when sales targets aren’t met. It’s always important to borrow realistically in the beginning; bear in mind that most small businesses don’t make a profit for at least the first year.
#3. Doing Everything Themselves:
In an age where it’s easier than ever to start an online business in a day, it’s no surprise that an increasing number of new business owners are trying to run every aspect of their company on their own. But, whilst this might be a cost-cutting solution for the short-term, it may actually cause you to lose out in the long run. Instead, take the time to identify your own strengths and weaknesses, and outsource any work that requires you to put in long hours and effort so that you can focus on running your business instead.
#4. Soft Hiring Tactics:
It’s understandable that you’d want to hire your friends and family if they are looking to work with you but bear in mind that giving somebody the job just because you know them can be disastrous for your company. You will need a strong, experienced team to help your small business grow and succeed, so be prepared to put considerable time and effort into finding the right people. Use professional business networks such as LinkedIn to network and find the best people to bring on board.
Avoid making these common business mistakes, and you’ll improve your chances of entrepreneurial success.