Get a head start – How to avoid top ten rookie mistakes?
For many years I’ve been working with start-ups and supporting businesses through their early years of growth.
I often hear about new starts folding in the first year due to poor planning, lack of contingency budget or cash flow problems. They could still be up and running today if they’d avoided making any of the mistakes listed below.
Read them now and avoid the pitfalls of being a start-up business and enjoy a successful future.
20% of new businesses fold within their first year and
50% within their first 3 years
- Relying solely on gut instinct. No business has survived tough times on a wing and a prayer. Every business, even before launch needs structure. The foundation for success is a robust Business Plan. It safeguards you against all eventualities and acts as a survival manual for start-ups.
- Trying to do it all yourself. Yes money is tight but there’s not enough hours in the day to manage everything and something will slip. Seek external expertise you can trust. Experts free up more of your time, maximise business opportunities and avoid storing up any future legal or costly financial mistakes.
- Putting the wrong systems in place. Inadequate business systems slow up business and devour your valuable time. There are many low cost, reliable automated systems designed for small businesses available. The right choice guarantees your business runs smoothly and you’ve more time to spend on what you love about your business.
- Not dealing with red tape. Staying on top of changing government legislation, VAT and tax regulationscan be confusing and stressful for business owners. However, it can’t be ignored or you’re storing up bigger problems and risk losing your business. You must confront it head on or call in an expert to deal with it as early as possible.
- Not learning from past mistakes. It’s easy to repeat the same mistake over and over. The cycle can be broken by using your accountancy data to analyse what’s worked or failed in the past and identify seasonal peaks and troughs for future business planning and managing cash flow better. You can also learn from others by talking to business mentors and sharing experiences at networking events.
- Not structuring a business for the future. The tax and liability implications of setting up a new business today can be complex. Starting out, do you choose to set up as Sole trader, partnership, limited liability partnership (LLP), limited company or plc? Ask yourself how you want to position your business in the future and then seek advice. Getting it wrong from the start can be costly in the long run.
- Ignoring the competition. Keeping a watchful eye on the competition and spotting any changes to pricing or offerings is key as they can directly impact your business. Discover what competitors do well and not so well then spread the word to new and old customers why you’re different.
- Hiring staff without planning for the future. The future of your business depends on hiring those with the right mix of skills that fit with your short term and long term company objectives. Hiring staff is now more complicated. You now have to consider your employees future too. Employee legislation has changed and under Auto Enrolment regulation you the employer are responsible for employees’ pension pots.
(Read our Auto Enrolment blogs for useful guides)
- Not researching. Talking to a handful of friends and a small sample of clients once or twice doesn’t create a clear and honest picture and help you to know if your business is viable. Researching and testing your products, services and marketing will develop a robust cycle of learning that helps your business to evolve and succeed.
- Not negotiating. Remember your investment costs influence how much you can charge for your products or services, and in turn affects how competitive and how profitable you are. Negotiate. Just because you’re new doesn’t mean there isn’t any wriggle room when setting up trade discounts with suppliers or rental agreements with Landlords when finding premises. Read our Location, location, location blog
It’s never too early to speak to an expert but it can be too late.
Contact Simon Murrison on 0141 290 0262 or or connect via LinkedIn or Twitter.