Being self-employed is a lot of fun, but it’s also a lot of work. Most new business owners make a lot of mistakes. Here are some of the most common, and how to avoid them.
Failing To Budget
Small businesses are especially prone to accounting mistakes, unless they happen to be accountants.
Make a budget, and stick with it. Budget out, to the penny, how much money you need to keep the doors open. Then, round up. Yes up. Add in 10 percent to that rounded figure. This gives you a nice cushion – a safety net – that hopefully you’ll never have to use. But, it will be there if you do need it.
Set aside another 15 per cent for emergency expenses.
Not Getting All Licenses and Permits
Not getting your business licenses and permits could put you out of business before you get started. It could also earn you hefty fines from the government. Speak with specialists such as Slater and Gordon before you get knee deep in Internet research. Ask about employment law and get up to speed about other issues, like special licensing for your business and industry.
Not Filing Taxes Properly
Make sure you’re paying estimated taxes and filing correctly at the end of the year. Mistakes here will put a costly drag on profits. You may want to hire a tax specialist and a bookkeeper to help you with this, as it’s really easy to make mistakes on taxes and accounting.
Not Creating Enough Value
Aside from the legal and regulatory issues, there’s practical business mistakes that a lot of businesses make. For example, not providing good value for the money people are paying. It’s not enough to just sell something. You have to overwhelm your customers with value.
The businesses that succeed in this economy make their offering so attractive that customers feel both stupid for not taking business owners up on the deal and a little bit ashamed for taking advantage of the company’s generosity.
You have to offer so much, and be so good at what you do, that customers are a little taken aback by your price points.
Spending Too Much Money
Just like in personal finances, businesses need to control costs. In some ways, it’s more important to do this as a business than as an individual – especially when you have employees relying on you for a paycheque.
When you’re first starting out, keep those costs low. If you run a website, for example, shell out as little money as you have to for a business website and hosting. You don’t need a huge budget for either of these things.
A small host, costing $4 a month, will probably do you just fine.
If you’re starting a brick-and-mortar company, don’t be afraid to negotiate on rent and find a place that’s in a cheap part of town.
You don’t need £100,000 for most businesses. You can probably get one started for less than £30,000. If it’s an internet business, you can get yourself up and running for less than £100, probably less than £50.