Mistakes to Avoid When Starting a Business

The United States Bureau of Labor Statistics has data showing twenty percent of new businesses fail within the first two years of opening their doors. The data goes on to show about half of all businesses fail after their fifth year. So how does a person successfully launch a new small business?

Many growth strategists, legal experts, financial advisors, business consultants, and small business owners have compiled a list of mistakes to avoid when starting a business. These are some of those mistakes you can avoid to help your business survive and grow.

1. Inadequate Resources and Financial Preparation

A common mistake made by entrepreneurs is to neglect their financial planning. Neglecting this piece finds them lowballing how much capital they will require to get their business up and running. Many first-time small business owners find they have forgotten to factor in unknowns, delays, and other challenges. When these events occur, without the right financial preparation, it can mean the end of the business.

2. There is No Business Plan

Many businesses start without a business plan. When starting up, you should map out a business plan even if it only consists of one page. In this plan, there should be a list of operation costs, how much you are intending to sell, whom you are planning to sell to and why. When you take the time to chart this information, it will keep your efforts consistent. The business plan will also serve as a rallying point for you and your team to measure your progress.

3. No Understanding of Your Market or Target Audience

A significant mistake made by businesses starting up is they do not understand the market or customers they need to build for. It is important to realize that even if your product or service is outstanding or unique, it doesn't mean you'll succeed unless you know the market and which customer base to target for sales.

4. Failure to File Proper Legal Structure and Business Registration

One of the biggest mistakes a small business or any business can do is to fail to register their business and choose the right business entity or to protect their intellectual property. These are crucial steps to take right away or they will cost you valuable time and a lot more money to correct later.

5. Over Hiring or Hiring Wrong

Another significant mistake a business can make when starting is hiring too many employees. Before hiring a full-time employee, consider having a part-time one instead who can meet your needs just as well. You can also consider the idea of hiring a subcontractor rather than an employee. The idea of bringing someone into your business you've worked so hard to build can be frightening. The best way to ensure you hire an honest, hardworking employee is to contact Grow Simply to perform a background check or screening.

The background check or screening will look for possible criminal activity, verify all information given is true, ensure any education or certification are valid, and more. This screening will give you peace of mind when allowing someone into your small business.

6. Waste Money

If your cash flow is not handled correctly and you waste money it can be a death sentence for your business. Common mistakes are hiring too many employees or paying yourself too much. Make sure you have the business to cover expenses of hiring employees, and that they are hard-working, honest people you can trust to help with your operations. When considering your pay, it should be done on a percentage of your revenue so that you do not cut your business funds too short.

How a Starting Business Can Avoid Hiring Mistakes

Grow Simply helps businesses find the right people for the right positions. We understand how hiring the wrong candidate can ruin a business, just as hiring the right talent can help a business grow and succeed. Contact us before choosing your next employee and let us help ensure you choose one who can increase your productivity and success.