Are you a start-up? Don’t do these 7 things.
So, you’ve got a great idea for a business, you’ve worked hard to create a business plan, and you’re ready to get going? Well just take 10 minutes to read through these seven easy pitfalls, and make sure you’re not going to be jumping down any of them.
It’s all about dealing with your finances head-on. Creating a structure and way of work that will keep your business on target. These are seven common mistakes that we see start ups making, and we don’t want you to fall into making them.
The seven mistakes a start-up should never make:
Mistake 1 – Putting your gutfeel over available information:
Instinct is a wonderful thing, it’s probably what got your business idea off the ground in the first place, but don’t dismiss the facts. Making assumptions about your finances is never a good idea and will only lead to disappointment.
Always keep your business plan in your mind. Always track your revenue and expenses and your eyes on your cash flow.
Mistake 2 – DIY accounting:
We’ll let you get away with doing your own accounts while you’re establishing your idea and finding your feet, but you need to get an accountant as soon as you can. You’re probably already juggling lots of roles, one moment you’re CEO, the next you’re planning your social media schedule and obviously someone needs to make the tea! Juggling self-taught accountancy on top of everything else will end up in a catalogue of errors. Start small and work up, outsource your taxes and set up a quarterly review with a business consultant.
Mistake 3 – Project budgeting failure:
Any project your business undertakes needs a firm structure, budget and stick to it. This will prevent costs from spiralling, you’ll be able to keep a firm track on whether your project will require more funds and make smart decisions that won’t damage your business.
Mistake 4 – Disorganised files:
The importance of balancing bank statements and keeping receipts in order cannot be overstated. Patchy bookkeeping can cause chaos for your business and result in a lot of trouble, not to mention wasted man hours trying to resolve the problem. Keeping all your receipts and cross-referencing your accounts with your bank statements is vital for transparency and future success. Establish it as part of your everyday routine and it will pay dividends in the long run.
Mistake 5 – Misunderstanding your target market:
Before you start trading, you should have your business plan in place. If you don’t, then look at our blog here for how to create a successful one and get it in place.
A key part of that business plan is understanding your market, knowing how your business will fulfil a gap for your customers or clients is essential. If you’ve not heard of the 4 P’s in marketing before, now’s the time to familiarise yourself:
- PRODUCT: What is it that you sell? Are you creating a plan per product (or service) or a general overview of the business?
- PRICE: How much are you charging? How does this make your customers or clients feel about your products? Are you inline with the rest of your market / your competitors?
- PLACE: Where are you selling? Where are you promoting your business? Is this where your customers (or potential customers) are looking for you?
- PROMOTION: How do your customers find out about you? What strategies are you using and are they working?
Work through these points and create a firm structure for your business. Stick to it, but keep checking in on it, what’s working and what needs to change? Are your customers finding you?
Mistake 6 – Hiring quantity over quality:
Over-hiring is an expensive mistake to make. One of the highest costs to a business is hiring and on boarding employees, so going overboard is a huge waste of money. Knowing what you need, and hiring for that need is essential, take your time and come up with a structure.
Bad hires are another threat to a small business. Hiring the wrong employee can create an imbalance within the company culture. In turn, this can negatively impact other staff and even damage your business’ reputation. Don’t rush the hiring process. Taking extra care to avoid mistakes can save a lot of trouble in the long run.
Mistake 7 – Miscalculating expenses:
To keep your business afloat, you need to know exactly how much cash your business burns each month. Keeping a meticulous record of your expenses allows you to understand where your money is going, and how much you’ll need to survive.
Underestimating your cash burn can land your business in hot water, so create a projection of your monthly expenditure and be sure to monitor it closely, adjusting whenever necessary.
A successful business needs a strong financial foundation, so keep these mistakes in mind. No business is invincible and it really does pay to be cautious and always stay one step ahead, by making sure you avoid these seven mistakes, you’ll be onto a winner.