Becoming a first-time business owner isn’t easy. From managing investments and hiring a team to maintain product quality and establishing a brand, setting yourself up for success as a new owner is a challenging but highly rewarding feat. While some new companies blast off towards tremendous growth and financial wealth, others aren’t so lucky.
Unfortunately, new businesses are fragile, so inevitable missteps have the potential to make your new business a disaster rather than a triumph. If you’re eager to pursue a business startup, review this list of nine common first-time business owner mistakes to make every effort to avoid them.
Not Investigating All of the Funding Options
Business financing is one of the most challenging aspects of growing a startup. After all, most new businesses start with little to no assets and no collateral. As a new owner, likely, you can only afford to take out so many personal loans.
First-time business owners will often struggle to secure business loans from traditional lenders like banks. New entrepreneurs regularly make the mistake of not looking into more beginner-friendly lending options such as marketplace lending. Ensure that you do your homework and research all funding options thoroughly before accepting defeat.
Forgetting to Address Intellectual Property
Meeting with an intellectual property lawyer is paramount to the success of new business owners. Patents, trademarks, and copyrights are examples of intellectual property that can remain unprotected without proper legal support.
If a competitor files a patent over the top of a new firm, the business may have to pay fees or even be unable to sell a product (a situation no new company can afford to deal with). Even established corporations can be negatively affected if they are legally unable to market or brand their products.
An intellectual property lawyer can ensure you fully understand your responsibilities and how to navigate the sometimes choppy waters of copyright law.
Not Keeping a Close Eye on Bank Balances
This tip may seem obvious. Still, you may be surprised to learn how often business owners forget to keep track of their bank balances. You may inadvertently spend more than you earn without keeping an eye on your early expenses. In the first few years of a business’s conception, overspending is one of the most common reasons small businesses fail.
Failing to Engage with Consumers
Consumers and customers are how you stay in business, and new companies ought to act accordingly. Engaging with your customer base and taking their input into account is a surefire way to keep your future clients on your side. Invest in market research and show your customers that you’re willing to adjust your product to suit their ever-evolving needs.
If you’re not sure where to start connecting with your customer base, consider hiring a market research team or investing time into building a social media presence.
Hiring a Poor Team
Recruiting personnel can be difficult, but the hiring process is one of the most significant steps in a new business’s development. Sometimes, companies have an unqualified applicant pool, feel stuck, and hire individuals who are not adept. Unfortunately, incompetent or disloyal hires can contribute to a toxic work environment and unsuccessful production.
Don’t be afraid to take your time to ensure that you hire the right individuals from a smaller pool of more competent prospects. If you’re struggling to attract qualified applicants, ask yourself if you’re offering enticing enough salary, benefits, and project opportunities. Consider tailoring your job requirements and description to weed out those who are unlikely to benefit your company.
You might have to go above and above to persuade stellar candidates to choose your organization over your competition, but the payoff will be worth it.
Becoming a Micromanager
New company owners know that your business can feel like your baby. While it’s perfectly acceptable to be highly invested in the success of your startup, micromanaging will turn off new employees and put you at risk for burnout. After all, working for a micromanager is frustrating and disheartening. Micromanagers can inadvertently poison their company culture and create a toxic workplace environment, contributing to high turnover rates.
Leaders of healthy and successful companies must learn how to delegate and hire a trustworthy team. If you are constantly micromanaging your employees, you should evaluate why.
Do you not trust your employees because you haven’t adequately prepared them for the job? Or do you constantly want to be in control even in situations when it isn’t necessary? Reflect on your motivations and be open to making a change if needed.
Having No Business Plan
The business plan is your roadmap, and starting a business without a plan is equally as dangerous as starting with a bad one.
New companies that fail tend to think of a business plan as a formal statement that they put together and then layaway when business ramps up. In reality, each business’s business plan will evolve as the company grows, and any given company may have many business plans as its goals shift.
A revised company plan helps raise additional funding for expansion throughout the growth phase. If you decide to sell or close your firm, the business plan might include strategies and deadlines for new ownership or dissolution transitions. In other words, the business plan is vital.
Not Researching the Market
In the simplest terms, market research is a process that helps potential entrepreneurs decide if a business or product idea is sustainable. Not researching the market for your business will be potentially detrimental and costly.
In the long run, market research supports businesses in being more efficient, cost-effective, and competitive while providing businesses with the data needed to determine a target audience and what will relate well with consumers.
Forgetting to Prioritize Personal Health
The first few years of a business’s operation aren’t just stressful for the company. Keep in mind that running a new business can significantly strain your physical and mental health. Failing to prioritize your wellbeing may negatively impact your business and will undoubtedly cause harm to you personally.
If you’re thinking of starting a business, consider that it’s a time-consuming process. You’ll significantly boost the chances of your new business thriving if you take the time to study, research, and avoid the first-time business owner mistakes listed above.