People often dream of the freedom that owning their own small business would bring but don’t pursue the opportunity once they realize how much hard work and risk it involves. It takes someone with multi-faceted skills to succeed as a small business owner since it requires one person to fulfill many roles. Accounting, human resources, inventory management, and information technology specialist are just some of these.
It usually doesn’t take a startup owner too long to discover that juggling all these roles is too much for one person. However, they may not have the time or money to move forward with the business if they don’t follow best practices for startups from the beginning. Below we highlight some of the most common mistakes made by new small business owners as well as what you can do to avoid them.
Making These Mistakes Could Kill Your Small Business
There’s no question that launching a startup is expensive. In fact, failing to secure enough funding prior to opening the doors to customers is the leading cause of small business failure. In addition to your own funds, you may need to take out loans, open a business credit card, apply for grants, seek money through angel investors, or try a fundraising campaign.
Running a business also takes money. The best way to avoid a cash flow problem later is to work with Juvo Business Advisors from the start to develop a strategic financial management plan. Other things to watch for early in your entrepreneurial career include:
- Market saturation: It’s critical to research the market you plan to enter to see how many companies that offer similar products or services already exist. Entering a flooded market will force you to set your prices too low just to remain competitive.
- Not hiring the right support staff: You can’t do it all, as much as you might want to. A successful business requires a strong management team that works well together with each member bringing different talents to the table.
- Pricing is too high or too low: It can take a lot of trial and error to determine the most appropriate price to charge for a product or service. Setting the price too high could cause you to lose money to the competition. Low prices might get you the customers, but you won’t take in enough to be profitable.
- Product demand: Does a demand exist for what you would like to sell? This is an important question to answer when preparing your business plan.
Never Launch a Startup without Preparing a Business Plan First
The Small Business Administration offers free business plan templates on its website along with advice on how to write one and what to include. The traditional business plan and lean startup are the two most common types used by new small business owners. Traditional plans typically start by listing the executive summary. This sums up everything else in the document in just a few paragraphs. Your executive summary should provide your company’s mission statement, location, a brief business biography of key players, a description of products and services, and financial details if you plan to apply for financing. Here are the other sections to include in much greater detail:
- Description of company and the need it intends to meet
- Market research results
- Legal structure and organizational management chart
- Details of products or services you intend to sell
- Financial projections
If you’re not sure how to start, we recommend reviewing several sample business plans on the Small Business Administration website.
Focus on What Makes Your Business Unique
It can be challenging to establish your brand and prove to customers that you offer something the competition doesn’t have. This is true even when not entering a saturated market. We recommend starting slow by focusing on only a few products or services as your signature items. Once interest builds and customers start developing loyalty, you can make more things available for sale.
The most rewarding things in life are often the most challenging. Juvo Business Advisors is here to help you succeed as a new small business owner. Please contact us to request your initial consultation today.