Starting a small business is an exciting time. But it's also a time when it's easy to make mistakes that can cost you money, time, and customers. That's why it's so important to take stock of potential pitfalls and plan accordingly. Today, PLR outlines some of the most common mistakes new small business owners make, as well as how you can avoid them.
Putting Off a Business Plan
It's not uncommon for new small business owners to forgo having a business plan. Many new entrepreneurs simply leap. However, a business plan is essential because it gives your business direction and helps you secure funding. Without a business plan, it's all too easy to get off track or make decisions that aren't in the best interests of your business.
At this point, if you’re feeling a little out of your element, you might also consider going back to school and earning your bachelor of business degree. That will give you a big advantage over the competition by providing you with the bedrock knowledge you need in today’s business world. Also, thanks to the flexibility of online learning, you can study at your own pace without having to take too much time away from your business.
A Lack of Marketing Strategy
Another mistake new small business owners often make is not having a marketing plan. Just like a business plan, a marketing plan gives your business direction and helps you allocate your resources effectively. A good marketing plan will help you attract and retain customers, generating revenue for your business. It also helps you zero in on your target market and allows you to effectively grow your brand.
The Wrong Business Designation
When starting a small business, it's important to choose the right legal structure for your company. The wrong choice can leave you open to personal liability, tax problems, and more. For example, if you plan to have employees, a sole proprietorship isn't the ideal choice. Instead, you'd want to designate it as a limited liability company. An LLC is a type of business entity that offers many benefits over sole proprietorships, making them the preferred choice for many entrepreneurs.
LLCs offer limited liability protection, meaning that the owners are not personally liable for the debts and liabilities of the business. LLCs also offer tax flexibility, as the owners can choose to be taxed as a corporation or a partnership.
Trying to Do It All
It's natural to want to take on as much as possible yourself. After all, you're the one with the vision, and you know your business better than anyone else. However, there comes a point when trying to do everything yourself can start to hold your business back.
First of all, it's simply not possible to be an expert in every area of business, so you'll inevitably end up making some mistakes. Secondly, spreading yourself too thin will make it difficult to focus on the most important tasks and could lead to burnout. Finally, building a strong team of employees or advisers can give you the support you need to take your business to the next level.
Blowing Off Your Budget
Creating a budget and sticking to it is essential. When you don't include budgeting as part of your financial planning, or if you fail to set limits on spending and tracking expenses, you set yourself up for a lot of financial problems. Carefully craft your budget, and review it every month so that all expenses are accounted for. Be sure to also set limits on spending in specific categories (e.g., travel, entertainment, office supplies) and track expenses closely.
Depending on your business, you may need to hire an accountant.
Making Poor Hiring Choices
Hiring unqualified individuals instead of professionals or people with the right skills is another serious pitfall. Your best bet is to hire experts in the fields you need help with. Be sure to take employee onboarding seriously, creating comprehensive onboarding materials and procedures. Failing to properly train employees on company policies and procedures could lead your new staff to make a lot of mistakes, which can adversely affect your bottom line.
Starting a small business comes with its fair share of challenges—but by avoiding these common mistakes, you'll put yourself in a much better position for success. By taking the time to develop strong business and marketing plans, minding your budget, choosing the right legal entity and hiring the right people, you'll set your small business up for success from day one!
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