Common miscalculations that new entrepreneurs make and how to avoid them
We all know that starting a business is no easy feat. However, it’s even more difficult when you’re miscalculating critical elements from the get-go.
Luckily for you, Beacon Wealth has compiled a list of some of the most common errors we see new small business owners make again and again. We’ll see how to avoid them so your company doesn’t suffer too much damage before it gets off the ground.
● Underestimating start-up costs. Not having enough money saved up in case things don’t go as planned will likely be an issue if you haven’t factored in how much cash flow will be needed to cover expenses for, say, three months straight, or however long it takes to have enough sales to cover your running costs.
● Overestimating their available time. It could be very tempting to do everything on your own when you’re starting up. It’s a lot cheaper and lets you retain control over every element of your business. But there are only so many hours in the day, and all of the small tasks that make up running a business successfully are overwhelming. Make sure that you plan how many hours you can and want to work and decide what would be the best way to spend those hours. For the rest of the tasks, determine if you need to hire more employees or whether you want to turn to freelancers. Make the most of the growing online marketplaces for freelancers, where you can find experts in any area you might need.
● Underestimating risk. Even if you have plenty of savings, it might still be worth looking into insurance policies to cover the potentially crippling expenses coming from any unexpected events, such as fires, theft, or flooding.
● Overestimating what they know. No matter how capable an entrepreneur you are, it’s unlikely that you are an expert in every single area of your business and that you’re able to stay up-to-date with all of the market trends in the different areas. This is why it’s always a good idea to turn to continuing education. There are plenty of short courses you can take online or even get an advanced degree in business, accounting, or marketing to help you know exactly how to grow your business and adapt to market changes.
● Underestimating the importance of marketing. Even if you have the best product in the world that covers all of your target customers’ needs, you’ll struggle to make sales if you don’t know how to get it to them. Make sure you design a comprehensive marketing strategy to understand what customers you are targeting, where to find them and the best way to communicate your products or services to them.
● Overestimating sales. The enthusiasm of the start-up process tends to lead entrepreneurs to overestimate how much product they will actually sell. It’s important to dream and aim high, but it’s also crucial to know the minimum volume of sales you will need to cover your costs and deliver the profits you need. This way, you can plan to over deliver and sell as much as possible but still keep an eye on the minimum threshold you need to make a business actually viable.
We hope that the information provided here has been insightful and informative, but we also want you to know that there is no magic formula or template for success. If it were easy, everyone would have their own successful company. But the rewards of watching your own company grow after all your hard work and nurturing are definitely worth it.
If you’re interested in learning more about how to map out a healthy financial future, contact us today!