Common mistakes that are easy to avoid when starting a new business.
No matter what type of business you set up, starting, and managing a new business is extremely challenging. And it is natural for every startup to make mistakes. Even experienced business people make errors and misjudgments from time to time. However, that does not mean there are not common business mistakes that you should avoid. By learning from the most common mistakes new business owners make, you can swerve the same pitfalls. So, pay attention to the following five mistakes new business owners often make, and you will be able to create a successful startup.
1. Not Having a Clear Budget Plan for Your Business
You will have a tough time making your business profitable if you don’t have a clear budget plan.
You need to have a budget for operational, marketing, and other expenses. A clear budget enhances financial discipline and clarifies your route to business growth. Knowing what you can and cannot afford each month is crucial.
2. Not Filing or Paying Your Taxes on Time
Too many business owners make the mistake of not filing their taxes on time. It cannot be stressed enough how much this can negatively affect your business. If you miss the tax filing deadline, the IRS will implement a monthly fine, which increases until you file your tax return. The same goes for neglecting to pay your taxes. Your business will be hit with steep penalties from the IRS if you do not pay your taxes. Making common tax mistakes like those can quickly make your new business go-under.
One great way to avoid tax problems is to hire an accountant to handle all of your tax filings for you. There are a lot of different types of accountants available, so it is best to hire one who is well-versed in tax procedures. For example, Certified Public Accountants are the most respected and knowledgeable accountants around. They can sign tax returns, represent clients in front of the IRS, and do all other tasks that other accountants do.
3. Not Conducting Market Research
If you set up a business without first conducting market research, you are setting yourself up for failure. Too many new business people start businesses based on a survey of friends and family who back up their business ideas. But you cannot rely on people you know to give you an accurate opinion on your product or service.
You need to create a well-defined target market if you want your business to succeed, so do not make the mistake of skipping market research. Use primary sources like prospective customer surveying and holding focus groups, and secondary sources like census data to gather valuable information that can drive your business forward.
4. Underpricing Your Service or Product
New business owners with little business experience always make the mistake of thinking undercutting competitors on the price for a service or product will increase sales. But if your prices are not high enough to create a sufficient profit, you are setting yourself up for failure, even though you may be gradually attracting more and more customers.
This mistake is most often seen in service-based businesses, which intentionally lowball prices to get their first customers. Use your industry’s benchmarks to work out your profit margins and financial projections, and compare your prices to competing companies in your local area. And work out what value and USP your company can add to justify higher prices.
5. Not Hiring Employees Fast Enough
It is tempting to do everything yourself when you first set up a small business. But there comes a time when it is necessary to delegate tasks. That means hiring employees.
Far too many first-time business owners wait too long before hiring staff members. If you do not employ the help when you need it, or if you end up hiring the first candidate you interview because you are desperate for help, you will end up with more work to do and less professional assistance. From the beginning of your startup, it is important to delegate tasks to others so that you have more time to focus on the crucial aspects of your business and drive your company forward.