New business owners are naturally excited about getting up and running. If you’re a new business owner, then kudos to you. You’re doing the hard work necessary to put yourself and your family on better financial footing.
But along with the enthusiasm for your new business comes the possibility that you will make mistakes. Minimizing those mistakes can help you get off to a quick start. So that you can try to avoid them, here are some of the biggest business mistakes new business owners make.
Ignoring Your Customers
This sounds like a no-brainer, but sometimes you get so caught up in getting your business set up that you neglect the voice of your customer. No matter the product or service you are providing, make sure that you try to see it from the customer’s perspective. Make marketing and advertising decisions based on customer needs and expectations, and always respond to customer queries or complaints.
Improperly Valuing Your Product or Service
Finding the right price point for your product or service can be tricky. If you overvalue it, you may not make enough sales to meet your profit potential. If you undervalue it, you may make a lot of sales, but the profit margins won’t be big enough to cover your projected income. Do as much research as you can on your target market and what pricing those customers will bear.
Having Unrealistic Market Expectations
Every new business owner believes they will be successful. Otherwise, why start the business in the first place? Where they get into trouble, though, is when they believe they can do more business than is realistically possible. Create a business plan with reasonable expectations for your business in years one, two, and three. It may actually benefit you to be a little conservative with your projections early on.
Not Sticking to Your Budget
It may not seem like much. A few extra dollars here, a few extra dollars there. But when you spend more on certain line items than you budgeted for, you run the risk of disrupting your cash flow – to the point of dragging down your business. As a new business owner, you likely have little discretionary funding. Choose where you spend carefully, and stick to your budget whenever you can.
Not Separating Personal and Business Accounts
Keeping personal and business accounts separate is important, especially if you operate as an LLC, partnership, or corporation. These business structures protect your personal assets from being seized in the event your business goes into debt. Establish a separate bank and checking account or line of credit for your business. Having dedicated accounts also makes it easier for you to deduct allowable business expenses at tax time.
Failing to Back Up Accounting Software
Few things are worse than losing data you spent hours inputting into your accounting system. Make sure you regularly back up your accounting software and store it in a safe place. Cloud services can be both a convenient and secure solution to backing up your data.
Not Keeping Regular Books
If you toss all your receipts and payments in a shoebox, expecting to record them on some indistinct day in the future, you may be in for a big surprise. When bookkeeping backs up, it gets harder and harder to catch up. You may even lose track of your company’s financial position altogether. Set aside time at least monthly, and preferably weekly, to keep your books. You will be glad you did, especially at tax time when you need to report your income and deductions on your tax forms.
Doing Too Much Yourself
It’s easy to believe that you have all the time in the world to spend on your business. But the reality is: you don’t. Life sometimes just gets in the way. And, anyway, wouldn’t you rather be devoting as much time as possible to satisfying your customers’ needs? It may actually pay off for you to hire professionals to do some of the work you have little time for. Hiring an experienced bookkeeper or tax accountant, for example, may save you time and money in the long run.