Mistakes Business Owners Make While setting up Their Small Business!

A survey has revealed that “50% of businesses close down within the first year before even reaching to their breakeven points”. Launching a new small business successfully is not a cinch. The loom of failure continues to loom over for at least five years unless you take hold of the market. The key to ride out is to set yourself apart from your competitors, but it is easier said than done.

Mistakes entrepreneurs make while establishing their small business

The excitement of starting your own business should not overshadow the challenges you will face after embarking on your venture. Here are the mistakes that entrepreneurs make while setting up their businesses.

Not researching the market thoroughly

Charles Fish, a digital marketing expert, says, “before you dip you toe in the water, you should thoroughly research the market”. It is important to know whether your product or service has the demand in the market. Are there enough customers to generate profits? Test your business idea before taking the plunge. A shallow market analysis will lead to the making of a poor business plan that is essential for taking out long term business loans.

Being afraid of running a risk

The business world is not for the timid. It is obvious to have stress, anxiety and fear about the success of your business, but Charles says, “Without taking the risk, you cannot streak ahead in the race of competition. “Instead of copying your competitors, you should boldly challenge the market by setting new trends,” he further adds.

Not delegating your responsibility

At the outset, you may want to keep your operation overheads as little as possible. Therefore, you will try to complete all the tasks on your own. “That is a big mistake that small business owners do,” says Charles. “You will be unfocused and disorganised. Instead, you should try to delegate your responsibilities. Make sure you outsource marketing tasks. Use software for repetitive tasks so you can focus on building a brand.

Not assessing your borrowing capacity

Start-ups need funding from lenders and investors. You will need to create a robust business plan to raise money. Understand how funding sources vary. You cannot be so sure about your profit-generating ability, so assess whether you can repay the debt despite a business failure. Your investors will seek a share in your capital. Are you ready to lose a portion of ownership? Do you not have any problem involving them in decision-making? All these questions should be carefully answered before raising the capital for your business. Talk to a business loan broker to know your options and choose a suitable one.

Not tracking your small business expenses

Running out of money is a very common concern among small businesses. The absence of a budget results in overspending. A poor cash flow is a threat to the survival of your business as you cannot grab propitious opportunities. Create a business budget and set an expenditure limit every month based on the profitability of the previous month. Look for ways to whittle down your business expenses to ensure a smooth inflow of cash.

• Check if it is possible to switch to the “remote work model”.
• Find out how you can cut the cost on advertising and marketing.
• Track payroll expenses and figure out how to trim them down.

The bottom line

As a small business owner, you should avoid making the aforementioned mistakes. Make sure to create a good business plan. It will help you understand your market and raise money for the capital. Understand your financial needs and find out ways to cut back on your operation costs. For more such informative articles, visit here.