Joining the ranks of millions of other small business owners can feel great: you have an establishment you’ve built from the ground up ready to get running, you have a potentially long business career ahead of you, and everyone is supportive of your venture. Wouldn’t it be an awful shame to screw all that up by making a rookie mistake that dooms your company? Starting your own business can be full of risks, and you should make sure that you’ve taken care of the biggest risk to your business before you begin: your own ignorance. Making sure you understand what not to do is just as important as knowing how to hire the right people or where a good location in town is.
Don’t Get Started Without a Business Plan
Your idea and your passion for your business should be more than enough to carry you through to success, right? Unfortunately, this is not correct at all. If you don’t have a plan for your business before you start out, you can probably plan on failing within your first year. A business plan will cover everything from where your start up capital is coming from, to how you’ll meet your monthly expenses, to the most important part of all: how you plan to make money with your company. If you’re thinking about getting started without actually having your business plan spelled out, you should think again. A plan will allow you to always know what your next step is going to be, and it should be the foundation from which you build up your business. Don’t let it become an afterthought simply because you think you have the experience or fortitude to power through the first year on your own.
Huge Start-up Loans Can Kill Your Company
Getting a business off the ground is both difficult and expensive, and most small business owners will find themselves speaking to a loan officer at their local bank at one point or another. While it’s not a bad idea to give yourself some financial wiggle room when you get started, and it could even be advisable, taking out huge loans right away is a quick way to kill your business. Do you really want to start your company under the dark cloud of debt? You’ll be rushing to pay those loans off as quickly as possible, and you might end up neglecting the legitimate needs of your business in the process. Look around at various options for securing start up capital besides loans straight from the bank, and focus on making your business profitable.
Early Success Doesn’t Always Mean Longevity
If you open your doors and immediately find success, congratulations! Your concept has got legs and you’ll be able to go places with it. However, don’t let this make you complacent. Owners who find early success often think that they figured out the formula on the first try, and that they won’t need to invest as much time, energy, or money in keeping their business successful. Then, six months later, their business drops off and suddenly their books are in the red. Don’t let this happen to you. Just because you’ve started strong doesn’t mean you’ll continue on that way, and you should vigilantly be working to keep your business afloat.
Don’t Hire Too Much
Having the power to hire your own employees is great, and you might even be able to give some friends of yours jobs in your new establishment. However, you should carefully evaluate the staffing needs of your company. You could end up hiring too many people, which would quickly become a drain on your finances. Bring people on slowly, and figure out how much work each employee, and you, can handle. If it’s too much, bring on someone else until you’ve found just the right level of personnel without wasting money on people you don’t need.
Understand What Your Market Can Sustain
A rookie mistake a lot of owners make is not understanding how much volume they can reasonably expect from their patrons. If you run a restaurant, sure, you can count on a crowd every weekend. If it’s a retail store, though, you may have weeks that are absolutely dead. Too many dead weeks equals a dead business. If you’ve staked your success on doing high volume consistently, you may have your expectations set too high. Don’t open a business in a neighborhood full of people who won’t be able to afford to patronize you. Not only is it bad business sense, but it will tarnish your reputation in the community, too.