Avoid Common Pitfalls: The Biggest Mistakes New Business Owners Make

Starting a business is exciting and nerve-wracking all at the same time. It can be overwhelming to think about everything that has to be done and even more difficult if you get tripped up by common mistakes. Fortunately, there are ways to avoid those mistakes, and we hope our brief guide puts you on the right track to steering clear of the most common pitfalls in business ownership.

Business and Friends Don't Always Mix

A typical mistake new business owners make is doing business with friends or family members. While hiring someone you know may sound like a good idea in theory, it can often lead to disagreements and hard feelings down the road. If you do decide to go forward with a friend or family member, make sure there is a clear understanding of roles and expectations from the start. Have an honest conversation about expectations, consequences, and communication styles before starting any type of business venture together.

You Simply Must Have a Marketing Plan

Before you launch your business, it's crucial to create both a business plan and a marketing plan so you have a clear direction for your company. A business plan outlines where your company is going, while a marketing plan identifies who your target audience is and how you will reach them. Both are essential for success as they provide structure on how to base decisions regarding your company.

Forgoing the LLC Designation

Choosing to designate as an LLC when starting a business is an important decision that isn't to be taken lightly. An LLC can provide tax benefits and personal asset protection that other types of business structures don't, and choosing to start an LLC may be the best way to protect yourself from any legal liabilities associated with operating a business.

?Forming an LLC also makes it easier to open a separate bank account for business operations and can help you build credibility with potential partners or investors. Without the LLC designation, your finances could become entangled with your personal assets, leaving you open to financial risks.

Don't Try to Do It All Yourself

Starting up any type of venture requires time and energy, and sometimes it's more than what one person has available. Don’t feel like you have to do everything yourself; instead, focus on what only YOU can do best and outsource other tasks. For example, delegate bookkeeping or accounting duties so they're done correctly and so you can devote your time to more important things like growing your customer base or creating new products/services for clients/customers.

Not Being Mindful of Your Hiring

Having the right people on your team is essential to business success, explains Turing. It's typical for new businesses to hire people without taking into consideration whether or not said employee will be able to contribute positively toward their organization's goals and objectives, or worse yet, hiring someone just because they are "cheap" labor. Instead of focusing solely on cost savings or talent when hiring, consider things like experience level within their respective fields as well as personality traits that may help foster team morale and collaboration among coworkers.?

?Troy Rulmyr, Business Consultant/Coach, emphasizes that skill and experience should not be your only deciding factors. You need to ensure that the candidate is a good fit for your business’s culture. He explains, "The biggest hiring mistake business owners consistently make is to base all of their hiring decisions on perceived talent. Talent means nothing if the employee candidate is not value-aligned and a culture fit."

Busting Your Budget Is Bad News

No matter what type of venture you launch, establishing a budget should always remain a top priority moving forward. Otherwise, expenses can quickly become out of control and derail any progress. Xero explains that implementing budget parameters right away helps you keep tabs on spending and ensures resources allocated toward particular tasks/goals are being used effectively and efficiently.

Prevent Pitfalls with Preparation

Even the most experienced entrepreneur can fall prey to these common business mistakes. However, being aware of them from the start can help you avoid them. Start by making a solid business plan that also includes your business designation and marketing plan. And if you need help developing any of these aspects, outsource! You have a great idea and killer leadership abilities, but you don’t need to have every skill your business will need. By finding the right people, you will build a team that you can trust, and together you can build the business of your dreams.

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