Experience is the result of your decisions, and whether your business survives long enough to gain experience is up to you. You have to make mistakes in order to grow your business, but if you learn from the mistakes of others then you can stand on the shoulders of giants and put yourself ahead of the game. Just because you are inevitably going to make mistakes does not mean that you have to make the same ones as everyone else. Here are some common mistakes that new business owners make.
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1. Overspending on the Startup
That big fat startup budget looks like it will last forever, but it is the most fleeting of your capital. You must do all that you can to save it. You must do all you can to spend it prudently and to save as much as you can. You can hold it in reserve to purchase fixtures and fittings at a later date. You should never have to buy a duster. Every item in your business should be used often enough to never need dusting. If there is a purchase that may gather dust, then buy it later and keep the money in your startup budget.
Another cost-saving tip is to partner with a contract manufacturer. If you're planning to sell products under your own brand, partnering with a contract manufacturer like Kenvox Contract Manufacturing can be an excellent solution to cut costs. This allows you to produce your products without the need to invest in your own production facilities. It's a cost-effective way to scale your business, enabling you to focus on branding, marketing, and distribution while leaving the manufacturing process to an experienced partner.
2. Not Being up to Date and Organized
This is more of an accounting and administration thing. Many business owners will be so caught up in the practical side of their business that they will neglect the more mundane and hum drum administrative and accounting work. It will often be left until the last minute, or will become a mess, resulting in disorganization.
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3. Not Adding Time Limits to Your Business Plan
Every goal needs a time limit attached, otherwise it is not a goal--it is wish.
4. Underestimating Costs
This will soon become apparent when liquid cash begins to dry up and the businesses operations start to slow. It is always better to overestimate costs, since they always seem to be closer to the real figure.
5. Not Doing Any Bookkeeping until It’s Too Late
This means going through all of your book keeping when it is time to file your tax return, which is going to take your weeks to do. Otherwise you can submit your records to your accountant without any bookkeeping and have them charge you a massive fee.
6. Underestimating How Much Time Tasks Will Take
Saying is always easier than doing, and a short list of tasks may appear like it will take half a day, but in reality the tasks you need to perform take a lot longer. Until you are experienced in the running of your business and are aware how long things take, you are going to have to overestimate how long tasks will take to complete.
7. Not Filing Your Bank Statements in Order
This results in unneeded fuss and confusion when you reference your bank statements in the future.
8. Not Having a Business Bank Account
Your business money and personal money needs to be kept clearly separate so that your tax records are as transparent as possible. A business account looks more professional and will stop you from mixing up your money. It is also easier to track your income and outgoings when you have a business account.
9. Not Having Separate Accounting Office Space
It seems unnecessary but you will soon find that your accounts are like a business within your business, and they are very easy to get confused and mixed up with your regular work. Your accounting space is the area where all the paperwork you are going to retain should end up. At the very least if you create a separate accountancy office space you will help to stop cluttering up your everyday office space with old paperwork.
10. Not Numbering Your Sales Invoices Sequentially
People do this because they are embarrassed by having an invoice that says 0001, so they send out sales invoices with big serial numbers on so that new customers look like they are customer number 23,000. Doing this will make your accountancy process a little difficult and you may be in trouble if a tax auditor starts asking where the other 23,000 purchases went.
11. Not Retaining Your Purchase Receipts
This is a matter of laziness over anything else. You must always retain your receipts.
12. Not Using Bookkeeping Software
Doing things the old-fashioned way may seem more organic but it wastes a lot of time that you could be putting towards making your business more successful.
13. Trying to Compete with Established Companies
Trying to steal the customers of established firms, and creating counter-arguments to their advertising efforts will put you out of business. You need to stay under the radar of your competitors until you have the money to stand against them and not be put out of business.
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