Before you open the doors, virtual or brick and mortar, to your new business startup, you will undoubtedly put in a lot of hours. These hours may include business plans, branding, and business registration activities but if you don’t receive the correct information from the beginning, it may cost you valuable time and money. Avoid these eight startup mistakes below.
How Will you Make Money?
Seems like an obvious question, doesn’t it? Even if a big profit isn’t the primary purpose of your business, all businesses, including non-profits, have think of how they will bring in enough money to keep the doors open. Especially while in the beginning stages of forming your business, you should have a singular focus on how you will make money. Develop one revenue stream before attempting to develop multiple products or services.
Don’t Hire Employees
You’ve heard of leverage and how leveraging other people’s time is the key to business growth but when your business is just beginning and cash flow and sales are minimal, don’t hire an employee if there aren’t enough money making activities to keep them busy.
Protect your Assets
Maybe your new business is still small enough that it isn’t responsible for supporting your family but you should still register your business. The primary reason for this is to keep business assets separate from personal assets. You don’t want to bankrupt your family if your business doesn’t work out.
Save your Money
Before you start your business, save up as much money as you can. Dipping in to family assets may not be appropriate especially if you have other obligations like college funds, retirement, and others. Don’t start your business until you know that you have saved enough money to open the doors and keep them open. Of course, we can’t tell you how much money that will take.
Don’t Rely on Credit
Of course, some businesses will almost certainly require a line of credit to open. Franchises and equipment intensive businesses are a few examples of these but most small businesses can be started without a line of credit. A line of credit is not only difficult to secure but it adds overhead costs that take away some of pricing flexibility you have. Stay away from borrowed funds as much as possible.
How will you know if your business is succeeding and how will you know if the amount of time you’re investing in to this is going to produce a profit either now or later? The way to do that is by setting goals. They may be laid out in your business plan or other document.
Now is the perfect time to open your business startup but don’t rush in to it. Take the time to lay out a plan that is cost effective and efficient.