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Starting a New Business? – Avoid These Common Mistakes
Our philosophy is that every business is different and therefore a blanket approach to accounting services to all of our clients just does not work. Although every business is different there are some common mistakes that new business owners make.
Starting a new business can be a daunting proposition and when data shows that 4 in 10 new businesses fail within the first 5 years, you can see why it is critical to start on the right foot.
We have detailed below our top 10 tips when starting your new business to help you make the right decisions and have the best chances of succeeding.
1. Not Creating a Plan of Action Before You Start
It is easy to rush into starting your own business, the issue is that too often people jump in with both feet before planning how they will operate, what they want to achieve and how they will achieve it.
Before you start we recommend that you prepare a short and simple business plan, financial plan and a marketing plan.
This will help keep you focused and hit the ground running rather taking a scatter gun approach which can waste your valuable time and money.
2. Too Much Plan and Not Enough Action
This point may seem to contradict the above, but you need to remember that business is never a perfect art and all the planning in the world can be thrown out of the window by an unexpected opportunity or situation.
You need to be prepared to embrace change to ensure that your business moves forward and ensure that you take actions rather than try and make the perfect plan.
3. Overspending or Underspending
As a new entrepreneur, money is going to be one of your biggest concerns and one of the key issues that will keep you awake at night. Making and saving money at the beginning will usually take priority over everything else.
There tends to be two mindsets among new entrepreneurs, either:
“You have to spend money to make money”
“I’ll spend the bare minimum until I have decent cash flow.”
Both of these approaches when taken to the extreme can be harmful. Spend your startup cash wisely, but don’t be afraid to invest in good people and quality products. This will bode well for you in the long term.
4. Shying Away from Marketing
We cannot stress enough how important marketing is when starting your new business.
Marketing can take many forms, from word of mouth referrals, to traditional advertising, and Internet marketing. There is no set approach to marketing and it will depend on what type of business you are starting and your target audience.
The mistake many new business owners make is assuming that business will come to them. You need to shout from the rooftops about your business so potential customers are aware of what you can offer and why they should use you over your competitors.
5. Not Knowing Your Competitors and Pricing
The excitement about a new business idea can often lead new business owners to think they have no direct competition, or that their product is head-and-shoulders above those of their rivals.
In reality, it is extremely rare to have no direct competitors unless you have invented a completely new product or service.
You need to establish what you are doing differently from your competitors and why you are a better option than them, so make sure you do your research!
One of the key issues when comparing your new business to your competitors is price.
Price your product or service to high and you will price yourself out of the market, but price your product or service to low and you could give the impression that your product or service is of a lower quality compared to your competitors.
Do your research into what your competitors are charging and do not be afraid to ask them directly.
6. Not Utilising Business Contacts
You will not be an expert in everything and having the right business contacts can be a huge asset to your new business.
Whether its a solicitor, an accountant, an IT provider, a bank manager or a marketing company, these types of contacts can really make a difference when it comes to how your business performs, they can offer advice based on their experiences and they may even be able to refer some work to you.
7. Ignoring the Legal Elements of Running Your Business
Ignoring the legal obligations of being a new business owner can be disastrous.
You need to have adequate insurance cover to ensure that you and your business are protected.
You need to ensure that your businesses name and logo are unique, as using someone else’s business name or a similar logo can lead to legal action and having to rebrand your business, which can be costly. We recommend that you use Companies House (httpss://beta.companieshouse.gov.uk/) to check whether your businesses name is unique and using a professional designer for your logo.
You need to ensure that you are aware of your legal obligations when it comes to filing accounts and tax returns, as well as when you need to pay your taxes by.
You also need to ensure that you and your business comply with the general data protection regulations (“GDPR”) which are the latest hot topic when it comes to holding personal data for individuals, including customers, suppliers and employees.
8. Not Being Disciplined
Being your own boss is great! You can wake up when you want, take breaks when you want, work from home and work the hours that you want to work.
The trouble with this is that it can be very easy to pick up bad habits and the occasional break can turn into 2 hours watching the TV, the hours you work can become less and less and waking up when you want can turn into lay-ins until midday.
These bad habits will lead to you looking for regular a 9 to 5 job within a few weeks as you haven’t done any real work!
Having the personal discipline to make sure you get done what you need to get done is really hard when you’re surrounded by comfort and freedom.
You will have to learn how to manage yourself and your time to be more productive and efficient. You may find that you need to dress like you’re going to the office or you have to work a late night to make up for that daytime shopping trip. If you aren’t working on a consistent schedule, then your road to success will be a lot longer.
9. Not Hiring Staff
Hiring staff is a huge step when you have a new business as you are no longer just working for yourself, but you are also responsible for someone else.
Some new business owners hire staff too quickly, some wait too long to hire and delegate to free up more of their time, and other build the wrong team.
Your employees are the most critical asset to your business and you need to ensure that you hire people that will help you drive your business forward.
When you employ members of staff make sure you outline your expectations, their roles and their responsibilities. Bare in mind that when you hire, attitude can be more important than a particular skill-set because skills can be learned.
Always ensure that you have employment contracts in place for all employees. In the unfortunate event of an employee dispute it will be vital in protecting your business.
10. Not Implementing Sufficient IT Systems
In the modern world, computers, smart phones, social media and the cloud are becoming more and more important for all businesses.
Ensuring that your business has adequate computer hardware, security and IT systems is critical.
We cannot stress enough how vital it is that your businesses IT systems are secure, especially with hackers, viruses and GDPR being so prevalent at the moment.
Backing up your data is a must! Losing all of your company’s data can be disastrous if it is not adequately backed up and could lead to you losing vital information and customers.
No matter how great you think you are with computers, we recommend using experts.
LP Networks Limited are a great option for all of your IT needs and they offer a great personable service. If you do use LP Networks Limited for your IT needs, please state that you found them via this blog by Edwards Bailey Limited.
If you would like any assistance with your new business or would like to discuss any of the above, please contact Billy Edwards at Edwards Bailey Limited – Chartered Accountants & Consultant Financial Controllers by email at firstname.lastname@example.org or by phone on 07851237635.
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