Start-up Mistakes To Avoid
With so many people affected by the COVID-19 pandemic around the world. You might be thinking of starting your own business after losing your job or looking for a safety net for the future. Avoid these costly Startup traps that will increase your chances of having greater success.
Lack of documentation of your Standard Operating Procedures (SOP):
Many Entrepreneurs in their excitement start on the business right away. Some spend time developing a standard business plan. But, documenting how your business is going to operate daily will make it easier to build it and tweak it as you go along. Let us face it, if you cannot work for any reason, your business stops if you do not have employees. If you do have staff and they are not able to function without you then your business also slows down. If you are buying a Franchise, you will get all the procedures documented as part of your Franchise training. There should be business continuity and disaster recovery built into your SOPs. This ensures your product or service delivery will not get interrupted in any way.
Inadequate Marketing Budget or Execution Resources:
Marketing is often confused with selling. For this reason, many first time Entrepreneurs take their product or service to the street and attempt to make a sale but end up with poor results. They do not set aside money to make their potential customers aware of the offerings they have. Resulting in a lack of trust, longer sales cycles, and no new customers.
Having a marketing budget and knowing how to spend it with the right activities will increase your chances of gaining customers. Having cash-flow from these customers will give you more opportunities to market and hire people to assist you with awareness. For example, building a website and not driving traffic to the site to convert is a waste of money to just put up a website. You need a marketing strategy before you can sell something to someone.
Prospecting & Quoting New Business:
It is important to go after the right clients or “low hanging fruit” and plant the seed that will turn into a fruitful outcome. Too many business owners go after anyone that will listen to them. The opposite of that is those that wait for someone to give them the orders. If, you were doing your marketing correctly then you should have the right prospect in front of you. Having a prospect that is 75% ready to buy is better than a random 1% prospect.
Something that will help in getting more business is to have a system for quoting your product or service. So many Entrepreneurs and salespeople do not price their product or service correctly. After the order there is not enough cash to reinvest into the business after expenses. You should know your margin for each product or service that you provide. You must take caution to stay above the set margins for your products and services.
Length of Runway & Perception of Time:
Here is where your planning is crucial. A runway is the length of time needed to get your business to become consistently profitable. Either people underestimate greatly the time required or have good planning and are on schedule. It is difficult to predict always the outcomes of your strategy as things are always changing quickly. It is a good idea to have 2-3 times the perceived time. The longer, the runway, the more money you will go through till you have good cash-flow. The expenditures to launch your business is call the burn rate. Always be measuring the results with the actions you are taking. Time and resource management could be the difference between closing your business or succeeding hugely.
Wearing Many Hats:
When you are starting and you do not have business partners or employees, you must do many things yourself. We call this wearing many hats. The problem or challenge with wearing many hats is you tend to focus more on the things that you are not good at or the ones you like doing. It is challenging for your brain to switch between tasks that are very different. An Entrepreneur can not be good at everything no matter how hard they try. This causes you to waste valuable time and resources. Be honest with yourself and get the support you need to get things done. Your business is an investment and that is how you need to look at it. If you look at things with a cost mindset then you will hesitate to invest in yourself and your business’s success. The worst thing you can do to yourself is to create a situation that causes you to burn out, which will result in the loss of your business.
Hiring Too Late:
This ties in with “wearing too many hats”. As you want to save money or you do not know what it will take to hire your first employee. Know what you are not good at and find a way to outsource this as quickly as possible. This should be part of your plan to launch your business. Be proactive and not reactive in your business. Speak with HR professionals or Temporary Employment Agencies to build a plan to hire your first employee. You can also investigate local government grants or loans for training and business expansion. There are millions of dollars available that very few people make the effort to access. Especially, right now with government wanting to keep the economy stable.
Business Continuity & Disaster Recovery:
The last thing on anyone’s mind is the unexpected natural disasters or even man-made ones. With the world always evolving, you must assess and prepare for all the possible risks to your business. Anything that would affect your business in serving the clients, keeping your staff from doing their job or eliminate your business’s cash-flow. There must be a system in place for all the “what if” scenarios. Depending on your business, you will have to create that support structure for the unexpected. Even a cyber attack on your business these days carries a hefty fine and possible jail time from the government bodies for negligence and loss of customer privacy.
Financial Record Keeping:
Most Entrepreneurs think that they can mix personal finance with their business finance and most do. In some cases, there may be no option, but how you track this information is very important. Especially when it comes to the government and tax time. Always knowing your business numbers is important to making the right decisions and profits.
It is easy to keep track of your business expenses using accounting software. It should follow the ASPE or IFRS accounting reporting standards. There are many software packages on the market and you can research them online for which is best for your industry. You can save yourself many headaches and money down the road as your business grows. Important things to keep track of are your sales, business expenses and mileage on your personal vehicle used for your business. Many things will get expensed or written off through your business if done by the rules. Why wouldn’t you want the tax savings?
Ask any business owner, and they will recommend that you to hire a good bookkeeper or accountant. To make sure your business finances are always correct for filing taxes and your business needs. An outside financial reviewer or third party with no interest in the business provides credibility to your financial information for taxation and investors.
An Advisory Board:
From time to time we need the advice of the people that we value. This can be paid or free advice from other professionals that will and do understand your business. To have an advisory team is the best thing you can do for your business. The last thing you want to do is work in a bubble by yourself for the first time. At the least, you need to have the advice of an Accountant, Lawyer, Business coach/consultant and technology expert. These people will help you to structure your business for success. You should also add to your team Marketing/sales expert to assist you to cultivate new business.
Investing in yourself and your business will help you flourish bigger and faster. If you do not get the assistance you need, you will struggle and so will your business. Many surveys have shown that you should get $3 for every $1 you invest in outside expertise. It is not only important to get the right timely advice but also to execute what needs to be done. Otherwise, you will stay on the same path getting the same results. That is call insanity and burnout.
Technology:
These days you cannot go without interacting with some sort of technology in your business. To work with your clients, suppliers, and others, you need to have the right technology to give you the competitive edge and business growth. It all starts with your business processes and where technology can play an important role to automate or support the business. For any business, you will need at least a reliable laptop, fast internet connection, website hosting, and software to run your business. There are many options in technology to put together a business system that works for your business. Do not change your business procedures to meet the requirements of the technology; especially software. The systems should work to the way your business needs to work. Many see technology as optional but it is not if you want to have a manageable and growing business.
