When an entrepreneur starts a business, they tend to think about all of the things they look forward to doing when their business is successful, but it’s easy to get carried away planning the future and forget to think about the present. There are some essential things that must be done when starting up a new business and if they are overlooked, could result in legal, financial and reputational issues which can crash your business as quickly as you got it started.
1. Rushing the business plan
A business plan is an essential part of starting a business – it sets out your vision and details the roadmap as to how you will achieve it. It includes your financial projections and sets a schedule, plans your purchases, determines the most appropriate location for your business and analyses the risks that you will face so that you can plan out the most appropriate mitigations for them.
If you plan to borrow money to start your business, your business plan needs to be bulletproof. Rushing your business plan will, at best, set you back time-wise as your lender asks you to review your plan and costings. At worst, you will go into your new business completely unprepared and could end up bankrupt.
2. Poor financial planning
An extension of your business case, getting your financials wrong can have severe implications for your new business. This can be as simple as underestimating the cost of buying stock, failing to plan for enough working capital whilst getting the business up and running, through to not putting enough money aside to market and promote your new business.
Advertising doesn’t need to be expensive – there is a lot that you can do for free using social media, but investing in technology and promoting your business to the right audience will help generate interest and footfall faster which is positive for the bottom line. There are specialists in marketing who can explain how digital signage software works to attract customers, for example, especially if you are located in a mall or other busy retail district.
3. Not asking for help
With so much to consider when starting a new business, it is important not to be shy about asking for help. This can be help from friends and family to help with childcare to allow you to work longer hours whilst getting the business established, through to professional help to ensure that you are doing everything correctly.
Being part of a business network can be really valuable for new entrepreneurs and hiring an accountant to manage your taxes will be a weight off your shoulders as they will ensure that you are properly accounting for your income and expenditure, support you in applying for any discounts that you are entitled to and ensure that your tax return is correct and submitted on time, saving you from IRS penalties downstream.
5. Getting your prices wrong
It is vital when buying your stock that you get it for the cheapest price, but don’t instantly start undercutting your competition by narrowing your product margins. While this may result in more sales more quickly, it will also alienate you from other traders and mean that you are working harder for less.
Instead, consider a sensible margin on each stock item to ensure that you are competitive but also profitable. It is important to keep a tight check on your spending, so always ensure that you know what you are spending and if the cost of an item increases, make sure that you also raise the price to compensate.
7. Failure to embrace technology
There are many technology solutions that cost relatively little but will make your job much easier, and these are things that it is sensible to invest in. Which items you choose will depend on the type of business that you are running.
For example, if you are running a fashion outlet in a mall, you can set yourself apart from your competition with digital signage, both inside and outside of your premises. Outside, your screen can display your stock and promote your business. This window display can even be interactive, with the display changing to suit the passing demographic. Inside, digital displays can support you with link selling by suggesting complementary items.
Finally, virtually all businesses would be wise to invest in building a strong social media presence to generate consumer loyalty.