Long gone are the days in which a great product and friendly smile will be enough for a company to thrive. Entrepreneurs will face a large number of risks before they even open their doors for business. With a failure rate as high as 70 percent in the first 18 months, here is a looking at some of the most common mistakes made by small business owners, and how to avoid them during your company’s infancy.
Choosing the wrong partner
Of the 28 million small businesses in the United States, only around 6 million have more than a single employee or co-owner. For those that do require a partner, however, it is vital to make this decision wisely.
Most owners are going to make their choice based on the individual providing seed money, but it is important to make the decision on more than just finances. The partner should be bringing some skills on board, and you should both have a track record of working well with one another.
Trying to please everyone
It is a simple fact that your products or services are not going to be for everyone, but this does not mean that most small business owners still don’t make an attempt at being globally liked. A satisfied customer is exceptionally important in the earliest stages of a business, but you need to be able to draw a line when customer service is harming the value of your product.
An easy way to avoid confusion is to have a clear idea of your targeted demographics beforehand. Limiting how many customers you need to please can make a big difference when it comes to ensuring that you aren’t wasting time or resources.
Not learning every component of the business
No matter how many skilled employees you bring on board, you should be able to carry out every single job from start to finish with your new company. You may never become completely proficient in certain aspects of business, but at least having a general understanding will help you make informed decisions later on.
If there is some aspect of your company that is confusing or overwhelming, then don’t hesitate to reach out and ask friends, mentors, or even the competition for some advice. Typically, if a business owner doesn’t have a strong grasp of how different aspects of the company work, those areas will suffer.
Failing to acquire the correct permits, licensing, and insurance
Fines, lawsuits, and medical emergencies may not be the most common reasons that small businesses fail, but these legal issues can quickly put even the most successful companies in the red. Owners should first set out to ensure that they meet all state and local minimums for insurance.
You should also check with the U.S. Small Business Owners Administration to see what permits and licensing you will need. According to the business lawyers at the Dore Law Group in Houston, nothing will stop your business in its tracks faster than lacking the proper permits and licensing. The initial fees may seem like just one more item on the long list of expenses, but even a slight mishap could mean bankruptcy if they are not in place.
Not sticking to a budget
This may seem like an obvious suggestion, but it is difficult for even business-savvy entrepreneurs to estimate exactly how much liquid assets they will need in the months leading up to their opening day. Rookie business owners may fail to realize that every day that they not making money means that they are losing money.
Rent, salaries, overhead, utilities, and countless other costs are going to be eating into your assets each and every month. In order to not get caught off guard, take the time to make a budget, collect all of your receipts, and know exactly where your money is going.
By keeping these tips in mind, first-time entrepreneurs can put themselves in the best possible position for making it out of those harrowing first few years for a company. Don’t find yourself guilty of these rookie mistakes, or you might be out of business before you even open your doors.