Beginner's Business Mistakes Release Date: 03 / 12 / 2008 Going into business for yourself may feel like a gamble, but unlike an honest card game, there are several things you can do to stack the deck in your favor. For example: learning from the mistakes of others can give you a leg up on the competition. Here are some of the most common errors new entrepreneurs make, and a few tips on how you can avoid them. Not starting with enough capital If you weren't an optimist in some respects, you wouldn't be starting a small business. But when it comes to dealing with finances, you can't afford to put on rosecolored glasses. Don't depend on profits you haven't yet made to pay for your overhead expenses. Go back to your business plan and decide realistically how much it will take you to launch your startup. Don't assume your business will be profitable in the first year and skimp on that figure. If necessary, look into getting a small business or bank loan—before your launch date, of course. Not having key players in place when you open You shouldn't wait until tax time to find an accountant, and you shouldn't wait until a disgruntled customer threatens you with a lawsuit to find a lawyer. Yet many new business owners put off these crucial searches and end up with less than satisfactory candidates when it's "crunch time." Depending on your level of expertise, you may also want to retain a business advisor. Spending too much on marketing You'll want to bring customers in the door as soon as possible, so you might be planning a lavish marketing campaign. Sure it will be expensive, but it will ultimately pay off, right? Not necessarily. Your first few months as a business owner will likely involve a lot of trial and error. If you prepare your marketing materials before your products and services are perfected, you'll end up paying for a lot of reprints. Go with economical marketing options at first, such as building a Web site, which you can cheaply update at any time, or exchanging web links with other small businesses. Overspending in general You want people to associate an image of success with your business, but many beginners take this too far. If you can't afford to hire a full staff, start with parttime help. Don't pay rent in a topoftheline office park until you have the clients and income to justify that address. As long as you're getting the job done right, clients' concern about your office decor or how many employees you have will be minimal. Failing to provide exceptional customer service Here's an area where you can really set yourself apart and prove to customers that they're right to put their trust in you. However, many beginners are so overwhelmed by the multitasking running a business requires that they fail to go the extra mile. Not only should you return phone calls promptly and deliver on time, you should also call to follow up once you complete the order, and even send thank you notes to your big clients. Not only will this keep your current customers happy, it will ensure positive word of mouth, which is the best kind of advertising you could hope for. Not charging enough Many beginning small business owners assume that the best way to set themselves apart and snag some patrons from the competition is to offer discounted services. It's not. While your customers may be happy initially, they won't be when you go out of business because you weren't making enough to keep up with your overhead. See what your competitors are charging and keep your pricing consistent with market standards. Distinguish yourself through high quality instead. Burning the candle at both ends Opening your own business certainly makes for a thrilling endeavor, and you may feel as if you're running on pure adrenalin. This can be useful, as you probably could attend to the business' needs 20 hours of the day.
But how long will you be able to run on 4 hours of sleep? Don't forget to take time for yourself and utilize other people to help you through this exciting and busy time. The better you take care of yourself in the beginning, the better habits you'll cultivate in balancing your business and personal life down the road. The common factor in avoiding the beginner's mistakes is planning ahead. While running a successful small business always involves elements of chance and luck, thinking things through and being mindful of each detail every step of the way will greatly increase your odds of pulling through.