Starting a new business is one of the most important moments in an entrepreneur’s life. It is also a difficult path, which can be particularly challenging and stressful for first-time business owners. There are many decisions to make, many details to take care of, and countless things that can go wrong.
In interviews, successful entrepreneurs always remember there’s no foolproof plan for a small business to succeed. There are, however, several common mistakes unskilled entrepreneurs can make in the process. Some have the potential to impact the finances of your new company.
Getting it right is essential to success, so it’s worth knowing the five most common mistakes to avoid in the process of starting your small business.
1. Not Utilizing Social Media
When it comes to a marketing plan, first-time business owners often immediately think of expensive advertising campaigns. But you can start to establish your brand quickly by maintaining a strong social media presence.
There are different platforms for different purposes. All of them allow you to create engagement easily and quickly, depending only on your creativity. A Facebook page for your business puts you in direct contact with potential customers. An Instagram profile with beautiful photos of your products, services, or even your staff can attract users who value the image more than the words.
At the end of 2020, there were 2.7 billion active users on Facebook and 1 billion active profiles on Instagram, an amount that traditional advertising would hardly be able to achieve. There’s also TikTok, Pinterest, YouTube, Twitter, and others, allowing you to easily work on brand awareness, brand personality, and real-time reputation management.
2. Poor Hiring Decisions
When you’re first starting, a common mistake is spending too much or too little and hiring the wrong number of employees. Both can be bad for your business. It is important to start with a strong team with proper training, but your crew’s quality is not measured in quantity.
You need to assess your needs before starting the hiring process. Do you really need full-time employees, or are you able to operate with part-time workers? Is it better to hire an entire crew or bring on outsourced employees or freelancers when there’s a greater volume of work?
Over time, it is beneficial to have employees with specific experience specializing in a certain area or sector. In the beginning, however, it’s more advantageous to look for versatile workers, who can assimilate to different positions and functions, and who are not afraid to learn.
3. Not Having Proper Insurance
Many first-time business owners believe that having an insurance plan is an unnecessary expense. But a new company is subject to many risks, and business owners should have a CGL policy no matter what.
CGL stands for commercial general liability, an insurance policy that provides coverage in the event of damage or injury caused by a company’s operation or product or for injuries to customers and employees on its premises.
This coverage helps pay the expenses of the most diverse claims—from an advertisement you published that received accusations of slander or defamation to a customer who slipped on your company’s wet floor, fell, and broke their leg.
You may want to purchase policies to expand your coverage for other risks, such as errors and omissions in financial statements.
4. Rushing Through the Budgeting Process
Every new company starts with a business plan where you must project your income and expenses to avoid surprises along the way. Even so, unforeseen events can happen, and it is important to have backup funds in case something goes wrong.
Keep in mind that it also takes some time for your business to take off, and your profits will not start showing up immediately.
You can create some cash flow by avoiding overspending. Never waste money hiring more workers than you really need, investing in processes that aren’t important right away, or buying the most expensive equipment on the market. Staying organized and focused is the key.
5. Growing Too Quickly
Growth is good, and it’s something that every small business owner expects when opening their business. However, you also need to keep up with demands.
Avoid expanding your company, crew, or range of services too quickly. Always remember that a popular retail item or service may not stay popular forever. In this case, what will you do with the excess of products or with the huge crew hired to handle a demand that just ceased to exist?
Don’t be afraid to take risks, but prioritize soft openings and start slow, specializing in a certain niche before trying to reach more customers or processes. Take your time to get your feet under you first.
Be Prepared to Face Mistakes
The path to success has many obstacles and challenges, especially when you are starting your small business and everything is still new. These mistakes are the most common, but there are many others you could deal with at some point in your career.
It’s often said that to make mistakes is human. What differentiates the successful entrepreneur is staying aware of these mistakes and working to avoid or minimize them. This is done with planning and quick, smart decisions.
Don’t be afraid of error or failure, but always prepare for challenges that arise. Investing in good insurance coverage, for example, can guarantee the security and stability you, your employees, and your customers need in this promising start to your new business.