Wednesday, September 6, 2023

6 Mistakes To Avoid When Setting Up A New Business


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The statistics showing the rate of business failure can be eye-opening. Data from BLS shows that 20% of businesses fail within their first year, with figures rising to 45% and 65% in the first 5 and 10 years, respectively.

The main reason businesses fail is poor cash flow. Still, ultimately, multiple poor decisions will have been made prior to failure that contributed to the company's demise. Avoiding these mistakes can serve you well if you want to give your business the best chance of success. But what should you avoid when starting a business?

Being Afraid to Fail

The fear of failure can lead to you needing everything to be perfect. But that isn't the way businesses are run. Fear of failure can lead to you missing out on opportunities and learning. Failure is part and parcel of success. Think about this: a group of people was split in half. 

One half was aided to make as many products as they could in 24 hours, while the second group had 24 hours to make one product. Who made the best one? The group who could make as many as they wanted made the perfect one as they had the chance to make mistakes and find out what didn't work as opposed to what did work. While the other group only had one chance to make it work and didn't get the opportunity to experiment. Think of failures as opportunities to learn because what counts is what you learn from them and how you pick yourself up afterward.

Not Seeing The Bigger Picture

Focusing on setting up your business for this moment in time or for the market right now will set you back once you have exhausted all of your options. Failing to plan for the future, putting expansion options in place, or knowing how to diversify what you do will hinder your success. Forecasting what might happen in your industry 5, 10, or 20 years down the line and where you want to be will help you grow as you need to and not become a relic.

Not Being Agile

Touching back on the above point, being agile means reacting quickly to the changes in the market and consumer habits. For example, in the energy sector, if you neglect to cater to consumers who need more competitive energy bills or want to look into more eco-friendly options, you will be missing out on a massive sector. Not being able to jump on board with trends or using tools such as community solar low income lead finders can put you on the back foot and potentially lead to losing clients who move to providers who offer this option.

Failing To Find or Define Your Target Audience

You are nothing without your target audience, and you should always be mindful of who they are and what they need. In the first instance, you should be doing market research to identify who your target audience is and how you can help them. Know their pain points, their budget, and habits when it comes to purchases to allow you to cater to their needs. If you don't, you might find you are one of those businesses that don't make it past the first 12 months.

Trying To Do Everything Yourself

Doing everything yourself and not getting help or assistance from seasoned advisors and professionals will put you at a disadvantage from day one. Even if finances are tight, you want to invest in the business's future, and doing so means getting expert advice from the right places. Whether hiring a VA to take care of compliance and legal issues, talking to a business lawyer about your options, and ensuring everything is set up correctly, hiring an accountant, or even getting a business mentor can be highly beneficial in those early days of a new business.

Hiring Full-Time Employees Too Soon

Some industries demand you have employees full-time from day one, but if you don't need them, bringing them on board too soon can hinder your progress. Instead, see if you can work with private contractors, freelancers, subcontractors, or even outsourcing partners to help you get to where you need to be before hiring people. This allows you to maximize your finances and use services ad hoc and remove the need for employee benefits, insurance, and wages when you can least afford it.

Making mistakes when you set up your business can lead to your premature demise, and while not all errors are bad, the last thing you want to do is jeopardize your success before you get going. Learn from others' mistakes, take advice, and make this venture work for you.

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