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As you get everything up and running for your new small business, it’s important to take stock of potential errors that could hurt your bottom line. Today, TS Web Services explores seven common mistakes new small business owners make and how you can avoid falling victim to them.
1. Hiring Inefficient Employees
One of the most common mistakes small business owners make is hiring the wrong people. When you’re first starting out, it’s tempting to try to save money by hiring friends or family members who you think will work for cheap (more on that later). However, this is often a recipe for disaster. Instead of basing your hiring decisions on factors like cost or personal relationships, take the time to find individuals who are truly qualified and who will mesh well with your company culture. Trust us, it’s worth it in the long run.
2. Hiring Within Your Social or Family Circle
Hiring friends and family members is another mistake that far too many small business owners make. Even if you’re confident that someone you know would be a great fit for the job, resist the urge to hire them. Why? Because personal relationships can quickly become complicated when money is involved. If things don’t work out, you could end up damaging both your business and your personal relationship, neither of which is worth the risk.
3. Lacking a Business Plan
Another mistake that new small business owners often make is not having a business plan. Developing a clear and direct business plan is essential to ensuring that your business has a solid foundation from which to grow. Without a business plan, it will be very difficult to make sound financial decisions, attract investors, or even just keep track of your progress over time.
Incidentally, if you’re starting to feel a little overwhelmed, it might be a good idea to go back to school in order to earn your bachelor’s degree in business, thus reinforcing background knowledge of the business world that you already have. These days, there’s a great deal of flexibility afforded by online programs, meaning you could even launch your business then go back to school as you work, allowing you to implement your lessons in real time.
4. Forgoing a Marketing Plan
In addition to having a clear business plan, it’s also important to have a marketing plan in place from day one. Too often, new small businesses pour all of their energy into developing products or services without stopping to think about how they’re going to actually get people to buy them. Your marketing plan doesn’t have to be overly complicated or expensive, but it does need to exist!
5. Selecting the Right Designation Based on Your Research
When you’re first starting out, it can be tempting to choose a business designation (e.g., LLC, sole proprietorship) based on what you think sounds best or what you’ve heard other people do. However, it’s important to choose a designation that actually makes sense for your particular business model. Otherwise, you could end up setting yourself up for problems down the road.
6. Not Protecting Your Intellectual Property
If you have any kind of intellectual property associated with your business (e.g., patents, copyrights), it’s important to take steps to protect it early on. Otherwise, you run the risk of having your ideas stolen by competitors — which could put a serious dent in your profits.
7. Ignoring Your Finances
Last but not least, another mistake that new small business owners often make is ignoring their finances until it’s too late. It’s important to keep tabs on your income and expenses from day one so that you can catch any financial red flags early on and avoid major cash flow problems down the road.
Starting a small business is an exciting endeavor, but it’s not without its challenges. To increase your chances of success, avoid making these seven common mistakes: hiring the wrong people, hiring friends or family members, not having a clear business plan, not having a marketing plan, choosing a business designation that doesn’t align with your model, not protecting your intellectual property, and ignoring your finances. By being aware of these potential pitfalls from the outset, you’ll put yourself in a much better position to succeed in the long run.