When building your very first business, it’s important to start out on the right track. It’s important that you give yourself the best possible chances for long-term success, and that means avoiding a number of key mistakes in order to maximize your staying power and minimize the negative impacts of any possible missteps.
Every first-time founder undoubtedly makes mistakes as they start out in business. Over time, they will learn many lessons specific to their industry, including the potential pitfalls and mishaps that they need to avoid. However, there are a few key mistakes that can harm any new business – mistakes which should be avoided if you want to give yourself the best chances of success as you start out. Here are just a few.
- 1. Don’t abandon an existing job or other stable income too early. While it can be exciting to start a new business, and tempting to spend all of your time and attention focused on your new venture, this can drastically hurt your chances for long-term success. For one thing, revenue is always slower to start than you originally project. Plus, once money does start coming in, it’s almost always less than anticipated. In order to give you the best chances for success in your new business, you need to maximize the length of time that you can spend working toward the developing your company – and that means securing or maintaining a separate income for as long as you can. If you already have a job with a steady paycheck, this means keeping it. Take consulting work as you can, or work on projects as a freelancer for extra money. To meet personal expenses, keep your reliance on money from outside your new business, and dedicate your free time during evenings and weekends to work on your new project.
- 2. Grow organically and at a measured pace. New business owners can quickly get caught up in the excitement of their ideas or new concepts. You can become so sure of your success that you try to grow too big too fast. To steer clear of this major mistake, avoid overspending on items like marketing. Also, don’t overinvest in top-of-line tools or other luxuries that aren’t yet affordable. Here again, it’s important to remember that every business expense you incur early in the life of your company may potentially shorten the staying power of your business. In other words, overspending makes it that much more important for revenue start rolling in quickly. If it doesn’t, you may soon find yourself forced to close up shop.
- 3. Avoid overcommitting yourself to fixed expenses. Here again, expenses can be deadly to a new business. Many companies look to take office or retail space in order to look more established, when they could very easily be run from home or online. The same thing goes for employees. While it can be tempting to start hiring people to fill various roles at your company, it’s important for new business owners to learn to handle as many tasks and run as many parts of their new company as possible. Growing your payroll too fast, leasing space too early, or taking on other obligations that expand your monthly expenses too quickly can all be detrimental to the long-term sustainability of your business.
Any one of these mistakes can quickly lead to the demise of your business. However, in the event that you happen to make one of these critical missteps – and your business still manages to survive – any one of them can still cripple the long-term profitability of your young company and keep you from reaping the rewards of building a successful new business.
If you want to be successful in starting your first business, make sure to avoid the common mistakes outlined above. Make a concerted to learn additional lessons as you go. Learn from your mistakes, and to avoid pitfalls; but also learn from your successes – even modest ones. Always search for ways to improve, expand margins, and develop new lines of revenue. Over time, consolidate your activities into those that are the most rewarding, financially and otherwise.
But first, make sure that you start out in your new venture on the right track. Set up your business to avoid the mistakes listed above, and set yourself out on the best possible footing. Keep an open mind, focus on learning, and your success will be sure to follow
Guest Post by Steven McMeechan
Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.