Starting a new business involves numerous questions and challenges. From the start, the odds of success for a new business in any industry are small. Owners and managers do themselves no favors by making mistakes, which can compound toward catastrophe. If you want to give yourself the best chances of success in your new business, be sure to avoid the following mistakes.
- Not starting up properly. When you start a new business, file to register as a company. In addition to documenting your activities and intent, this filing may provide you and your business with very important liability protection. These documents establish you as a real company, which can also have an impact on your mindset. Prepare and sign operating documents outlining the purpose of the company, rights and obligations of shareholders, how the company will be managed, etc. Make everything official.
- Walking away from full-time employment too soon. Starting a business takes far longer than most people think. It can be months – even years – before a business generates any substantial revenue, let alone enough profit to support owners and managers. In the meantime, bills need to paid not just for the business but for your personal lifestyle. Your landlord isn’t going to wait until your business is profitable before they collect rent, nor will an electric company keep your lights on if you fail to pay your bill. Starting a business is exciting, but don’t let it keep you from approaching finances pragmatically so you can make ends meet.
- Trying to grow too quickly. When you’re first starting out, it can be easy to get swept up in a wave of optimism and try to bite off too much too soon. Don’t hire people, if you can avoid it. Instead, use contractors or freelancers to take care of skilled jobs. Don’t take office space. Avoid overinvesting in your business. Instead of buying the latest and greatest equipment or software that’s overly comprehensive, buy second-hand or lease those items you need. Whenever possible, use vendors for services to avoid buying equipment of your own. Investing too much in your business cuts into your staying power – the amount of time that you can support yourself while building your business.
- Being too rigid in your vision. Some of the world’s largest and most successful companies began with entirely different purposes in the minds of the founders. When starting a new business, it’s critical that you stay flexible. This is part of the reason to avoid overinvesting in capital assets; because investing in specialized equipment makes it far more difficult to pivot later on if you find a niche you can exploit. Better to stay flexible, keep your eyes out for opportunities, and be ready to take advantage. This is one of the greatest advantages of small business. Don’t give it away by confining your mindset to a single vision and refusing to deviate.
- Thinking more about your business than your customers. As you get going in your new business, your first, last, and only thought should be about who you serve and how to serve them best. Ultimately, it will be your customers who will make or break your business, so always be sure to put them first. It can be easy to get distracted by various aspects of production or operations, but failing even for a moment to make your clients your top priority can lead any business owner astray.
Starting a new business is an exciting time and a challenge-filled undertaking. Anyone who chooses to take on the task should be congratulated even for making an attempt and orienting their mind toward the struggle that’s involved with a new business. Anyone choosing to take that journey should know at the outset that the odds of success are stacked against them, but that they will learn a lot along the way about business and themselves. To give yourself the best odds of success, be sure to avoid the mistakes listed above, and to heed well the numerous other lessons you’ll learn along the way. Enjoy the process, relish small victories, listen to your customers, and take pride in your willingness to hang out a shingle and take your shot at success.