by LawInc Staff
June 16, 2016
For many, starting a business is an exciting time. People spend years drawing up the perfect business idea and finally putting their ideas into action. However, due to too many business mistakes, many entrepreneurs see their businesses fail before they have a chance to bloom.
According to the Small Business Administration, more than half of new businesses fail within the first five years of operation and one third will fail within the first two years. To operate a successful business, entrepreneurs should educate themselves about the most common business pitfalls and avoid making the same business mistakes.
Below are the five most common business mistakes new businesses make.
1. Failing to Create a Business Plan
Every business owner should have a goal of what their business will be like once it has grown. The more focused you are on the goal, the more successful you will be at achieving that goal.
A business plan is useful to forecast your business and financial goals. Before starting your business, consider all the services your business offers and think about what has to be done to ensure each aspect will be successfully met.
Create a plan projecting how much money your business aims to bring in and how much you need to spend on marketing to achieve those goals. It is important to also keep in mind the challenges you might face trying to survive past the initial start-up period.
Also account for all obstacles you may encounter in the future. Expect the unexpected and be prepared to do whatever necessary when your business faces a bump in the road toward success.
2. Overdoing It
Because entrepreneurs are so passionate about their businesses, they tend to drain themselves emotionally, physically and financially when first starting up their business.
Do not lose site of what the purpose of your business is. You want the business to work for you, you do not want to be a slave to your new business. Neglecting your personal life can eventually take a toll on your business.
Learn to properly balance your business and personal life and avoid draining yourself right off the bat. Creating a successful business is like running a marathon, it’s not a sprint.
3. Not Focusing Enough on Marketing
You can have a great product or service, but it you don’t have customers, how will your business succeed?
Most owners incorrectly assume that social media can be their marketing tool to success. Although helpful, social media is not the best marketing tool. To see an impact on your business, you would have to invest a lot of time and money properly developing your social media page.
Pay-per-click platforms such as Google AdWords and Bing give entrepreneurs access to millions of people searching for their specific service or product. However, these platforms can also be expensive and difficult for users to fully understand.
Networking and building relationships with people in the community is one of the best and most inexpensive ways to start your marketing campaign.
Ultimately, a combination of marketing tactics, along with perseverance, is the key to success.
4. Not Choosing The Right Team
To operate a successful business, it is important to choose the right team to work with. Hire employees that you trust and know have the skills to operate a successful business. Avoid hiring employees based on friendships or past personal relationships.
Hiring employees you have previously worked with in a business setting will help you understand whether or not the employee can properly handle your business’ stressful moments.
5. Not Protecting Personal Assets
Simply put, do not start a business without forming a corporation or LLC. Failing to do so can be disastrous.
Without a corporation or LLC, you can be held personally liable for the debts and liabilities of your business. If something goes wrong, you’re liable.
A properly formed corporation or LLC can also help dictate what happens to businesses with multiple owners, in cases of one owner’s death, divorce or incapacity.
Another important issue that can be addressed if you form a business entity is what will happen to your business in the case of a dispute between co-owners.