Top 5 Mistakes Owners of a Business Start Up Make
With a business start up, you will not always get everything right. You may encounter a few bumps along the journey, however they do not have to derail you from your goal. Knowing the top five mistakes that are made by owners of a business start up will be useful during your company’s establishment.
Seeking advice from inexperienced people. It’s important that you seek advice from those who have several years of experience in the business arena.
Oftentimes, owners of a business start up put their trust in business persons who lack the expertise to carry them from point A to point B.
These very people you seek advice from may have been able to set up and conduct business for one to two years.However, their businesses ended up failing because they either lacked the experience or capital to move forward. Make sure that the persons providing you with advice are not only knowledgeable in the field of business, but also have proof to back up such knowledge.
Mismanaging funds. Owners of new businesses tend to allocate funds to resources that are not necessary during the inception of business. Some owners may spend money on renting office space. They may have income for rent set aside for six months to year without having any idea of how the rent would be paid after its first year of operations. In such cases, the company may have to forfeit its lease if its for more than one year which may end up costing the business more than anticipated. Another scenario may involve the company losing the office space and having to shut down business or move into the owner’s home. Before setting out to acquire office space or any other business-related resources, make sure that adequate funding has been allocated to each area. You may have to place certain projects on hold until you’ve acquired the capital to proceed with that venture.
Setting up the wrong legal entity. Some business start up owners may end up selecting the wrong legal entity, or choose to set up shop without legally registering their businesses with the respective authorities.
Choosing a legal entity for your business boils down to the advantages and disadvantages of that specific legal entity. While some businesses may thrive as a sole proprietorship, others may thrive as a partnership. Seek professional assistance when selecting the legal entity for your business. On the other hand, if you choose to operate your business without legally registering it, this approach may be detrimental to your company’s success.
Believing everyone shares your passion for the business. Be prepared to encounter skeptics or those who may not have the same level of enthusiasm that you exude for your business. While such persons may not share in your company’s vision, this does not mean you’ll have to place your business on hold until you find those who will support your endeavors. You may have to go through several unenthusiastic people to get to those who are passionate about business’ vision.
Pricing your products and services too low. As a business start up, you may be hesitant about placing high prices on your products and services. However, selling your products and services at a cheaper rate may only downplay the superior quality of your offerings. If your products and services are worth a specific price, make sure that you retain that price. People generally prefer quality over quantity.
Once you take these top five mistakes made by owners of a business start up into account, you’ll be able to avoid major setbacks in your company.