Starting a business is an exciting time, but it’s also one that comes with a lot of challenges. To set your business up for success, it’s important to avoid some common issues. Let’s take a look at 7 mistakes new business owners often make — and more importantly, how you can avoid making them when you’re first starting out.
1. Lack of a Fully Developed Business or Marketing Plan
One of the biggest mistakes new business owners can make is starting their venture without a business or marketing plan. Your business plan is your trail to success — it outlines your business goals and how you plan to achieve them. Similarly, your marketing plan details how you’ll market your products or services to your target audience. Without these plans in place, it will be very difficult to make your business successful.
2. Designating Your Business as the Wrong Entity
Another mistake new entrepreneurs often make is choosing the wrong type of business entity for their needs. There are several different types of business entities (e.g., partnerships, sole proprietorships, LLCs, etc.), and each has its own advantages and disadvantages. Be sure to do your research and consult with an attorney or accountant before making a decision — choosing the wrong type of entity could have serious consequences down the road.
LLCs are the most common structure for small businesses because of their liability protection and tax benefits. Plus, it’s easy to start an LLC in Arizona if that turns out to be your best option.
3. Not Consulting a Lawyer
Many new business owners try to handle legal matters on their own in order to save money, but this is almost always a mistake. Even if you’re not required to have an attorney on retainer, it’s still a good idea to seek legal assistance whenever you have questions or concerns about your business. Remember, an ounce of prevention is worth a pound of cure — a little bit of money spent on legal fees now could save you a lot of money (and headaches) down the line.
4. Ignoring Budget Limitations
When you’re first starting out, it’s easy to get caught up in the excitement and spend more money than you should. To avoid financial problems down the road, it’s important to create a budget for your business and stick to it as closely as possible. Review your budget regularly and make adjustments as needed — and don’t be afraid to cut back on spending if necessary.
5. Rushing the Hiring Process
Hiring employees is one of the most important things you’ll do as a business owner, so it’s important not to take this process lightly. Unfortunately, many new entrepreneurs rush into hiring without taking the time to find the right candidates. As a result, they end up with employees who are not a good fit for their needs — which can be very costly (in terms of both time and money).
Joe DiGiovanni, Executive VP at Corporate Job Bank explains with Hiring.biz, “Our best hires are the candidates that fit all of our company values. Therefore, when we interview, we not only screen the candidates according to the skills needed for the job, but also on whether or not they fit our company values.”
To avoid this error, take your time vetting candidates and only hire people who you’re confident not only have the necessary technical skills, but are also a great culture fit with you or your existing team. Pay close attention to soft skills and details like their attitude and general demeanor — these can be strong indicators of the type of employee they’ll be.
You can also seek support by partnering with a local staffing firm who knows the market to take the burden of hiring, timekeeping and payroll off your plate while you focus on getting your business started.
6. Bringing Friends into the Business
Just because someone is your friend doesn’t mean they’re necessarily good for business — in fact, doing business with friends can often lead to problems later on. If things go south, you could end up ruining both your friendship and your business relationship. To protect both yourself and your friendship, it’s important to set clear boundaries from the outset and treat each other like any other business partner would be treated.
7. Taking on Everything Yourself
As a small business owner, there are a lot of roles you’ll need to fill — but that doesn’t mean you need to do everything yourself. Trying to do too much will quickly lead to burnout — so don’t be afraid to delegate tasks or outsource work when necessary. You can’t (and shouldn’t) do everything alone — delegate tasks strategically so that you can focus on running your business effectively.
Avoid Common Mistakes and Strive for Success
These are just some of the mistakes that new entrepreneurs often make, but by having an understanding of them, you can avoid making them yourself! Running a successful business takes effort, dedication, and hard work. Avoiding these common mistakes will help put you on the path towards growing a thriving business.