Your business has everything you need to be successful, right? You’ve set up your website, created an eye-catching logo, and even bought all your equipment. There’s nothing more to do but start making money, right? Unfortunately, it’s not quite that simple. Every small business owner makes mistakes when they first set up their business. Here are the five biggest mistakes made when setting up a small business and what you can do to prevent them from holding you back from success in your new small business venture.
1) Failing to plan
Planning is often an afterthought. Entrepreneurs are so focused on pursuing their dream that they rarely take time to sit down and figure out what that dream is, let alone how to achieve it. If you’re going to spend countless hours of your life working toward something, make sure you really know what it is. A simple plan covering your aim for the first 12 months (with a clear target), a couple of top line objectives of how you plan to do it and then the actual tasks you need to do to make it a reality. Knowing exactly what its going to cost you to set up and run the business and how you plan to make that money back and live are the very basics of the planning you need to do.
2) Not outsourcing tasks
This is one of those mistakes that are easily avoided if you’re honest with yourself. It’s easy to think you can do everything better and faster than your competition, but often when starting out, businesses tend to do it all in-house: accounting, paperwork, taking booking and looking after clients etc. The list goes on and on. Finding a good accountant that knows your industry is a great start. Joining a support community of similar businesses, looking for people great at branding and marketing as well as considering a VA or someone who’s job it is to take care of your clients could be things to consider.
3) Hiring the Wrong People
Hiring is crucial to any business, and it’s important to consider all of your options when looking for talented employees. Don’t focus on how someone looks on paper, but rather how their past experiences fit into your overall business model. It’s common in pet grooming for example, for groomers to make the mistake of not hiring as they grow their companies. Dog grooming isn’t easy work, and as you grow its common that one person can’t meet demand alone. So hiring a bather, a groomer or a receptionist is a great way to increase your capacity and revenue.
This applies to all small businesses. In the photography industry for example, many photographers work alone and name their business after themselves, this then has the knock on effect of meaning every client always wants to book them only. This limits their capacity to grow and many photographers burn out trying to handle everything. A business manager to look after wedding fairs, or a studio manager to take care of clients and bookings are both great ideas. You could also help start out allowing the potential to grow by naming your business a more generic name therefore building your reputation without limiting your capacity. No-one knows who they are booking in with and have no expectations of wanting to have a specific person.
4) Not Sticking To a Budget
You may imagine your industry can be very lucrative; you may think it’s easy to start making money right away, but don’t underestimate how much cash will be going out (even if it doesn’t seem like much at first). It’s important to establish your income and expenditure, preferably on a weekly basis. Having some way of tracking where your money is going will help you make sure that you don’t go bust.
Knowing your hourly rate or your cost per service is a great way of always having at the forefront of your mind whether that client is actual covering the cost of the service they have booked. If it costs you £20 an hour to cover your costs and you only charge £20 an hour, you wont be able to pay yourself a wage and may as well close the doors. Savvy’s full business reports will tell you in the service overview report what your average cost per service is, so work out your total costs in a week or month and divide it by the num of hours you are planning to work and then see if a 3 hr service is worth your time!
5) Taking On Too Much Risk
Over-extending yourself too early on in your business can lead to risk that can threaten your entire business. Consider how much money you have invested so far, and make sure you’re not taking on any more than you’re comfortable with. Remember: don’t overextend yourself for short-term gain at long-term cost. In other words, don’t go into debt to expand your business—it could threaten everything you’ve built!