6 Mistakes to Avoid in Your First Year of Business
Your first year in business will be filled with rookie decisions and mistakes. You can't avoid them all — making mistakes is inevitable. But you can learn from the common missteps of entrepreneurs before you and avoid making those same mistakes yourself. Here are six common mistakes to avoid when first starting your business:
1. Not Making a Business Plan
Your business plan is your navigational map through your small businesses plans. Skimming through and looking at it like it’s just another piece of the puzzle instead of the viewpoint that the entire puzzle rests on is a major misstep. Even worse, some entrepreneurs don't make a business plan at all. Take the time to connect the dots and utilize data to work out the intricate details of your finances, employee positions and processes it will take to run your business successfully. Use this guide to writing a business plan to get started. And remember, a business plan is a living document that will change as your business changes so make time to update it on a regular basis. Here are some additional business plan resources for specific industries:
- How to Write a Trucking Business Plan
- How to Write a Restaurant Business Plan
- How to Write a Fix and Flip Business Plan
Also: 10 Business Plan Tips
2. Poor Marketing Research
Knowing who and where your customers are and how they want to spend their hard-earned money takes market research. Without valuable insights, you could waste your money on poorly targeted ad campaigns without ever reaching your true target audience. If you are basing your entire business model on bad market research (or none at all), this could be a big mistake you'll need to correct. Look at who your demographics for your business will be and set your price points on what their average incomes are and expenses along with your costs to produce it. Will this all add up to a thriving business? Doing the research up front can either set the stage for a real operational business or bring it back to the drawing board.
3. Not Listening To Your Customers
We all want to make sure we are connecting with our customers so leaving this vital step out will leave you in the dust of your competition. Engaging your customers and giving them good reason to spread your business through word of mouth is exactly what you want. But you can't just do the talking — you have to listen, too. Not listening to your customers is a huge mistake new entrepreneurs make. You may disagree with their complaints, but they are complaining for a reason. If you listen closely, you may find solutions to problems you're having. Social media can be a very effective customer engagement tool. Staying connected with videos, comments, articles or even asking your current customers to share exactly what they want from your business are excellent ways to engage. This can help you better serve your existing customers and find new ones.
4. Mismanaged Finances
Basing your companies’ budget and financial future on guesswork and a lackluster planning is the wrong way to start out your business. Your finances should be solid along with your ability to add in additional costs and changes if needed. Looking into all your available small business loan options in the first year can present a clear path to growth — or a sudden change in deficits. Opening your options to available lines of credit and showing your potential investors a budding business ready for growth will give you the potential to succeed.
5. Overspending on Overhead Expenses
When you're just starting out, it's easy to think you need more than you do. But the bottom line is a nice office or the best computer isn't going to make your business successful — you are. Overspending on overhead can leave your budget wanting more. Setting up a realistic budget you can stick to from day 1 can help your business thrive and grow. It’s going to take the hard work to afford all the bells and whistles that come with a successful business so don't overspend before you find success. Up Next: How to Become an Entrepreneur
6. Making Hiring Mistakes
Hiring the wrong people can have a big impact on your business — just as hiring the right people can have a big impact, too. Taking the necessary steps to write a job description , review resumes, conduct interviews and making a decision is crucial to your business's success. And even if you take those steps, you could still make hiring mistakes along the way. Hire for the most essential roles first and slowly grow your team as needed. Once your business is big enough, consider hiring a recruiter or HR professional who has experience in hiring to make this part of your business run seamlessly.
The Bottom Line
It's easy to read this list of mistakes and think you'll be immune. But the fact is we are all susceptible to failure — especially within the first year of business. Making mistakes is part of the process and while some can be avoided, others cannot. As long as you take time to correct and learn from those mistakes, your small business will make progress. More From Seek
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