admin Starting a business is a daunting task. Mistakes are bound to happen. Even if the idea of starting up your own business doesn’t make you nervous, it is worth stepping back and ensuring that you don’t make a mistake. Not all mistakes could be avoided. However, there are some common mistakes that one should be aware and wary about. Even a simple or a silly mistake has the potential to sabotage your business and turn it into a failure. Enthusiasm can both be a boon and a curse; your excitement and passion to launch your business into the world can bring you massive success, but the same could cause you to overlook certain things which would eventually bring you financial ruin.
And there’s no shame in making mistakes! Even the savviest entrepreneurs have made them. You can learn from what others have done wrong. Knowing the most common, and biggest, mistakes that people make when starting a business helps you avoid the very same problems. Growing yourself and growing your business goes hand in hand.
Without Business Plan
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on the organization, the organization’s financial projections, and the strategies it intends to implement to achieve the stated targets. It should also have market analysis, including competitive research on similar companies. In its entirety, this document serves as a road-map (a plan) that provides direction to the business.
So, you can see how important it is to have a business plan. It is akin to going on a trip without Google Maps. Along with the above stated aspects, business plan has one more role; it instils confidence in your investors as well as your team. In case you don’t need to funding from investors, you can go for a shorter business plan, which is called as lean start up plan. But the basic idea is, a proper business plan helps you a lot: it will help you think objectively about your goals and how you plan to achieve them.
Insufficient Funds
This one is pretty obvious. Not having enough funding would certainly lead to the inevitable demise of your business. But this does not only mean having funding. What we mean by this is having an idea of how much funding your business will require, a breakdown of how much funds will be allocated to which aspects of your business, how the funding will be secured, etc. There are some businesses that require a lot of money, like restaurants and hotels. Other businesses like freelance photography does not require as much money. Also, having an idea of how much money will be allocated to which department of your business, like marketing, staffing, etc.
While obtaining financing is often a huge hurdle for startups, there are many ways to finance a small business, so you aren’t limited to just one option.
Here are some strategies to consider:
• Using part of your salary to fund your new venture.
• Use some of your personal savings to give your small business a boost.
• Apply for a bank loan, which can give you a nice chunk of money that you can use towards your business costs.
• Raise money online with the help of a crowdfunding campaign.
Poor Maintenance of Business Records
Keeping precise records of your business is a very crucial task. Iyes, it is time consuming, and akin to a chore, but we cannot stress how important this is. Even if your business is a one man army situation, it is still paramount to maintain adequate records.
To be clear, by business record we mean expense tracking and income. While there are many reasons as to why business records maintenance is important, the single biggest reason is that business owners lose tax deductions when they’re audited by the IRS. Take, for example, the thousands of business owners who’ve lost their mileage deductions because they didn’t keep an adequate log of their business-related driving. See what we mean? Keeping records literally pays off. If you are ever audited, you need to furnish proper proof to the auditor. The auditor is not going to take your word for it. You need clear records to back up your returns and prove their accuracy.
There are a bunch of outstanding accounting software packages that can help you maintain your records. You’ve probably heard of a few different bookkeeping programs that are great for those running a Business-of-One. Be sure to test out a few of them to see which one works best for you.
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