5 Mistakes A Start-Up Business Makes and How to Avoid Them
Kunbi O / Monday January 21, 2019
No matter what industry you’re in, every start-up faces challenges. While some problems that arise are unavoidable and out of the business owners’ control, others can be avoided. Below are five of the common obstacles that start-ups encounter and how to tackle them before they become a roadblock in the development of your business.
1. Failing to designate the correct type of business entity
Sole trader, corporation, or limited liability company (LLC)? How you choose to structure your business can have financial and legal ramifications down the road. Choosing a structure that’s not a good fit for your business could result in a paying a higher tax rate and put your personal possessions and assets at risk.
Carefully go over your options before deciding on the structure of your business. If it’s possible, it’s a great idea to seek advice from an accountant on the advantages and disadvantages of each business entity before deciding on a structure. This post by Forbes and this post by HG are very helpful with deciding on which designation to choose.
2. Trying to do everything in your business
Business owners are often required to cover a number of bases when they launch their enterprise. However, while it can be tempting to try and cut back on expenditure when you launch your business, you could end up making mistakes that cost you more in the long run if you take on tasks that you lack the knowledge or time to perform to a good standard.
Be honest about the areas you lack knowledge or skills. If you’re not great when it comes to dealing with figures and accounting software, you could save yourself a lot of effort and headaches by outsourcing your bookkeeping to a qualified professional.
I for instance, suck at many things lol and have found help through freelance hiring via Upwork, Accounting via Freshbooks, Invoicing via Paypal, Social Media scheduling via Coschedule and Buffer, and team communication via Slack.
3. Failing to implement a structure to help you reach your business goals
Listen, it sounds like work but I can tell you from experience that the “go with the flow” module can only work for so long. It’s easy to picture where you want your business to be in a years’ time, but it’s much harder to come up with a plan that will get you there. Take the time to flesh out a business plan that details how you will reach your goals; who will be responsible for the different elements of your business and how will they combine their efforts to reach your business goals. Be honest with yourself and come up with something that works. If it doesn’t , then you can review and re-strategize accordingly.
4. Lack of cash reserves
Starting a new business can be stressful enough without the extra burden of fretting over whether you will be able to stay open for business in the short term due to cash flow problems. You can avoid this problem by creating a projection of financials for the following months and years. If necessary, you can seek out external funding to ensure you have enough capital to cover regular expenses and potential dry spells in revenue or emergencies.
5. Trying to make your business a fit for every client
Bruh! Take it from me: Not everyone is for you. It can be a daunting experience to launch a business and not have a list full of customers ready to buy your services and products. However, don’t make the mistake of taking on every potential client you come into contact with, without finding out if they are a good fit for your business. This is how you end up with the most horrible experiences.
A client that has needs that don’t fit with the established infrastructure and processes of your business could be a drain on your time and energy. You may find yourself spending more and more time dealing with clients that aren’t a good fit and neglecting the clients that work well with your established systems.
Create a persona for your ideal client and how they will interact with your business operations. After you have a persona, you can create a checklist of the required characteristics of your ideal customer. This will help you identify the potential customers that aren’t a good fit for your business and may become a drain on your time and resources.
So, here’s the gist
Launching a start-up is an exciting and STRESSFUL task. There will be obstacles that pop up and require overcoming to succeed. However, by tackling some of the common issues that could arise, BEFORE they become an issue, you can position your business to succeed and reach your goals. Here’s to us slaying our goals this year!