It’s easy to make mistakes when it comes to starting your own business, especially if it’s your first time. There are a lot of moving parts when it comes to running a small company or even just being self-employed. Of course, one of those mistakes is believing that you won’t make any errors. The idea is not to avoid them—if you tried to do that, you’d also avoid the risk that is inherent to a successful business—but to minimize the ones you do make and bounce back from them with resilience. The common ones listed below can all be avoided.
Neglecting Your Personal Finances
You might think that your personal financial situation is irrelevant when you’re starting a business and that you only need to worry about your business finances. However, this is not the case. Your own finances might be a factor with investors and lenders. If you can pay off any debts before you get started, you should. If not, you might want to look at how to better organize them. For example, you might have several student loans that you can consolidate as a single payment with a private lender. This could also reduce your monthly expenses. Having your personal finances in order also means you have a better idea of how much your business needs to bring in if it is your sole source of income.
If you are not seeking loans or investments, you may think you don’t need a business plan. However, it’s always a good idea to write one even if it is not as extensive as a formal one you would prepare to get others interested in your idea. Writing a business plan forces you to be concrete about your mission, your finances and your marketing. You’ll be better able to anticipate any obstacles that could arise and may see blind spots you did not consider. You may also want to think about whether you might want to hire other people even if you are a sole proprietor. For example, you may want an attorney to look over paperwork or an accountant to assist you with your taxes.
Creating a marketing plan should be part of your overall business plan, but it is so important that it should be a consideration all on its own. You need to know who your customer base is and what they want. A particularly common mistake is for people to assume that because their friends and family think their business idea is good, it must be. You need to look beyond your immediate circle. Some market research, including reading some industry literature and doing focus groups or surveys, could help.
People often start out charging too little for their products or services because they are afraid their customers won’t pay for them otherwise. There are a few problems with this approach. One is that customers may think of the product or service as low quality. Another is that it can make it difficult to raise your prices later. When setting your prices, be sure to keep your overhead in mind on top of your pricing.