If you’re just starting up your own business, you’ll no doubt be filled with optimism, and you’ll be buoyed by dreams of success. And, while it is important to go in with a positive attitude, you should also ensure that you have a healthy dose of realism thrown in to make sure that you stay grounded and don’t make any costly mistakes.
In this article, we’ll talk through some of the mistakes that you should avoid making when you’re starting out in business.
#1: Don’t Borrow More Than You Can Afford
Chances are when you are starting up your business, you will need to borrow the capital to get yourself off the ground. It can be very easy to get carried away with borrowing money. You may feel as though you will be easily able to manage the repayments of any debt that you take out. All you need to do is wait for the sales to materialize.
But what if the sales don’t appear?
Make sure that you do your sums based on lower-end estimations of the performance of your business. Don’t assume that you’ll fly straight away. You may end up trading at a loss for a long time and the last thing you’ll want is loan repayments that will bankrupt you.
#2: Don’t Rely on Financing
In addition to getting a loan to start your business, you could look for private financing from a specialist investor. Before you rush in and put all of your eggs in this basket, it is important that you don’t rely too heavily on private investors to fund your business. If at any point they decide that your business is too risky, they could pull the plug and you could lose everything.
#3: Don’t Forget Your Business Insurance
Whatever you do, don’t skimp on business insurance. Insurance will protect your business in the event of anything going wrong. Things go wrong all of the time, and you cannot predict what may happen tomorrow. Make sure that you have a good level of coverage for your business and don’t try and save money by getting a lesser degree of cover.
#4: Overlooking Your Unique Value Proposition
What is it that separates you from your competitors? This is something that you need to work out early on and nail down. This will be vital for promoting your business to investors, partners, and customers alike.
#5: Not Measuring Results
If you’re not measuring results in your business, how will you ever know if you are a success or if you are in fact failing? Set targets and determine robust key performance indicators that you will use to measure success and drive your business forwards.
Of course, there is plenty that could go wrong, and this small list will just skim the surface. You’ll need to ensure that you always have your wits about you and you sense-check every decision that you make along the way.