When you are starting a business there are many things you need to do and it’s easy to make mistakes that can push back your opening date or your progress in the first few months. Some business start-ups don’t survive very long because of basic errors. Here are a few to avoid.
1. Wrong business or wrong location – a cheaper location is often cheaper for a reason. Poor footfall, or footfall of the wrong type for your business often can’t be overcome even with a big marketing spend. Is there a demand for the business you are setting up? Do lots of research and really listen to what people tell you – it’s easy to dismiss things which don’t match your optimism about your business idea.
2. Not enough experience – many people underestimate the effort and long hours it can take to run your own business, particularly in the first couple of years. If you are not good at handling stress, managing staff, being polite to customers, selling yourself or multi-tasking, it’s probably not a good idea to be self-employed – unless you are a big start-up with a team.
3. Starting a business with friends or family – because you get on with people personally it does not mean you will make a good business partnership. Being close to someone means you will find it hard to separate business and pleasure. Having many decision makers at the same level does not work and unless roles are clearly designated it will cause tension. You may also feel your partner is not working hard enough and this causes resentment and is a common recipe for disaster.
4. Not having enough cash – sounds obvious, but it’s easy to underestimate start up costs, actual turnover or how long it will take to get the business established or paid. Having less than 3 months expenses in cash can lead to disaster and even 6 months can be difficult or impossible. Some businesses take two years to have a positive cashflow. Be realistic as poor cashflow ends businesses.
5. Not having a detailed written plan and checklist to opening– underestimating the time needed to open, tiredness, stress and many things happening at once means it’s easy to forget something crucial.
6. Under estimating the time it takes to get a phone line – a phone socket might be there but it might not be active. It can take weeks. Even if you have a VOIP line you still need a stable internet connection. It holds back printing, publicity and even getting a credit card machine and burglar alarm installed so apply early.
7. Not opening your bank account early enough – this can happen in a couple of days but it might take longer depending on what you require. It can be messy making payments to suppliers. You can get temporary apps to help you take payments if you have a good internet connection.
8. Not lining up tradesmen – if you are fitting out a shop or offices you need to have tradesmen who are good, reliable and that you can pencil in to be available when you need them. Good ones are busy so you can’t just call them up at the last minute. Time waiting for work to be done can make you late opening and so can cost you rent and overheads or will eat in to your rent free period when you should be trading
9. Not allowing staff training time before opening – particularly if facing the public immediately, staff need to have knowledge of what they are selling or the service being offered from day one. Also you will need to continue training to ensure your staff are well equipped to do their job well
10. Setting up stock on an EPOS takes longer than you think – if you have tiny products, in an accessories shop for instance, you could have a thousand items and if it’s a system new to you and stock unique to you this can take days or even a week
11. Not submitting your first vat claim quickly – if you are vat registered and you have spent a lot on set up you need to get the vat back to aid your cashflow.
12. Not writing detailed instructions to tradesmen or suppliers – even if they don’t confirm conversations or instructions in writing to you, you confirm it to them in an email. Costs need to be confirmed in writing too. Misunderstandings mean disappointment with what is provided, timelines and costs. This can cost you thousands and lots of stress.
See also ‘Common Business Mistakes and How to Avoid them’ by Susan Flinders of CMC Partners