Starting your own business is an unquestionably worthwhile venture, but it’s never one that you can expect guaranteed success from. We hear a lot of stories about businesses that started from nothing and grew into something incredible, but we don’t often hear about the other side.
And that’s how the perspective on starting a business gets skewed, because the other side is an awful lot bigger. There are far more failed business startups then there are successful ones and it’s not even really close.
The trouble is that people hear all the stories about the ones that made it work, they buy the self-help books the business owners write and read their motivational speeches and they watch their YouTube videos that have more bragging than actual advice and they think: “I can do it too.”
And the truth is that they’re not actually wrong, because businesses can succeed, but there are so many things that can prevent that from happening, so many obstacles to overcome and mistakes to avoid that are often not considered in the face of a booming business.
I mean the first step is the great idea that you are sure is going to be something that there is a genuine market for but that’s not enough, you need to know how businesses fail so that you can know what not to do.
So let’s have a look at some of the most common mistakes that you need to try and avoid:
Not Having a Budget
For the purposes of this article I’m going to assume that you already have a certain amount of money. I mean failing to generate any kind of initial capital is another problem that is often made, but most people know that to start a business you need money.
And in some cases it can just come from savings that you’ve built up over the years. Maybe you’re getting a bit of help from partners or investors, the most likely source of startup money and perhaps the most reliable a business loan.
But here’s the thing about that: You borrow money, you have to pay it back. And you’re going to have a really hard time doing that if your business doesn’t make any money. Or worse, if your business loses money.
And this is what’s going to happen if you don’t draw up a budget. You need to know what your business expenses will be. Things like rent, paying your employees if you’ve got those, insurance, office supplies and a bunch of other things.
You have to allocate your funds appropriately as well as having some set aside for emergencies. It can seem like a daunting task and can make you feel like you’re not going to make any money, but you could lose control very easily if you don’t do it.
So many startups make stupid financial mistakes because they skip this step, so get out ahead of those by making sure you know where your company’s money needs to go.
Not Familiarizing Yourself with the Market
So many people think that the idea is enough. You come up with something that you think no one has ever thought of before and you decide that that’s what’s going to make you a millionaire.
And then you set out to put this idea in motion and spread it into the world without doing an ounce of research. For one thing, you need to make sure that there is actually a gap in the market and someone hasn’t already capitalized on what you think is brand new.
And while you think you have something to sell, you also need to know how to sell it. Doing market research can help you find out what marketing strategies work for the type of thing that you’re selling and where best to advertise.
You can also understand what your competition is doing so that you can do your best to keep up with them or better yet, keep one step ahead. This is all really important stuff. Your idea and what you’re selling is your passion but the market is arguably more important.
Not Having the Right Documentation
Ugh paperwork. Everyone’s favourite part of their job. Well maybe it is actually if your passion centers around paperwork. I’m not going to judge anyone for what they love and what they want to make money doing.
But for most of us, filling out forms, sending emails and signing different pieces of paper until your wrist feels like it’s going to fall off is just a chore. But unfortunately it’s extremely important if you want to have a recognized business.
For starting a business in the UK there are a couple of things you should make sure you have before you try to get off the ground. Whether you’re starting a partnership or a company there, a different type of document is required for each one.
You’ll need the articles of association to set out who is going to be making the day to day decisions for the company and then there’s the employment contract, the director’s service agreement and you’ll also need insurance.
There’s a lot to think about and if you don’t do it all before starting, then you could end up getting shut down or perhaps even fined.
Trying to Do Everything Yourself
As much as you probably don’t want to share the profits with anyone or as little as you might trust others to be reliable not mess things up for your venture, there’s just too much work involved to do it all on your own.
This doesn’t necessarily mean that you should hire employees right off the bat, but there are certain people you should enlist the help of and delegate some of the workload too. People whose jobs are specific to these aspects of your business.
Build a strong foundation with an accountant, an attorney and a banker at the very least. These three can help you with the financial side of things as well as the legal side of things and can ensure that you’re up to date with your paperwork.
If things get too overwhelming for you, I would also suggest looking into getting a virtual assistant, something that people didn’t have access to in the pre-internet days, but just look at the sort of things they generally do.
Having a virtual assistant who can take care of all the little jobs while you focus on more important stuff can relieve a huge amount of stress.
Even if you do all of this stuff, you still aren’t guaranteed success. But what taking these steps does is prevent you from falling into the same traps that so many businesses fall into and which sink their business before it gets a chance to swim.
It takes time and effort when really all you want to do is work on this idea you’re super passionate about, but preparation is key so do as much of it as you can.