This article is contributed by Brian Smith.
The first year of small business ownership can be challenging to say the least. The learning curve is steep, the hours long and the odds very much against you. It’s therefore hardly surprising that many don’t make it through.
The good news is that most small business owners who fail their first year do so for the same reasons. And by educating yourself about those reasons, the odds of you becoming one of them drop dramatically. Should you find yourself at the helm of a new small business, here are eight things not to do during your first year of operation.
Renting Unnecessary Space
One of the first things that many new business owners do is invest in commercial space. Unfortunately, this is also where many make their first mistake. Commercial space isn’t cheap. It’s also not something that you can opt out of once you’ve signed a contract. It follows that unless you absolutely have to have it, it’s not an expense that you should be paying.
Hiring Friends or Family
At the time, asking a friend or family member to come work for you can seem like an excellent idea. Unfortunately however, it rarely, if ever, ends well. Friends and family members come with baggage. And what’s worse, they’re near impossible to fire when you discover this fact. With the amount of talented strangers out there, there’s just no good reason to hire somebody that you have a previous relationship with.
Hiring Unnecessary Employees
Another common first year hiring mistake is hiring full time employees when all you really need is the services of a talented freelancer. Demand for a new business’s products tends to fluctuate a lot during the first year and it’s therefore surprisingly easy to think that you need more labour than you actually do. If you’re serious about keeping your costs down, which you should be, new hires should always be considered a last resort.
The odds of a new business succeeding rise and fall with the quality of its marketing strategy. Despite this fact, many new business owners treat marketing as something of an afterthought. Unfortunately, the old “build it and they will come” adage hasn’t held true for many years now. If you want customers, these days, you have to go out and find them. Regrettably, this is something that many new business owners learn the hard way.
If sales aren’t quite as high as you had expected, it can be tempting to cut prices. Unfortunately however, this is a very dangerous game to play. Cutting prices might be easy but the same cannot be said about raising them back up again. And it doesn’t matter how many sales you are making if your profit margins are too slim to cover your overhead. New businesses should aim to distinguish themselves on quality, not price. Focus on the former and you will find people to pay the latter.
Not Hiring an Accountant Immediately
If there’s one thing that every small business owner needs, it’s a good accountant. Most first time business owners don’t know a thing about bookkeeping and this can prove problematic to say the least. And even if you do know your way around a balance sheet, a good accountant can not only save you money on taxes, they can provide invaluable financial advice. In other words, hiring an accountant is just common sense.
Working Seven Days a Week
As a new business owner, it’s only natural for you to be working long hours. The first year is rarely easy and if you’re afraid of hard work, you’re never going to make it through. There is however a line. And if you’re currently working seven days a week, it’s important to realise that you’ve crossed it. Fail to take at least one day off per week and it’s only a matter of time before you burn out.
Trying to Grow Too Fast
Finally, if there’s one mistake that you don’t want to make during your first year of business ownership, it’s trying to grow too fast. Your number one concern as a new business owner shouldn’t be growth, it should be having enough money in the bank to keep your doors open. This means not taking unnecessary risks, and keeping your running costs as low as possible, even at the cost of future profits. Rapid growth doesn’t mean a thing if you don’t have the cash flow to keep up with it.
Author Bio: Brian Smith is an employee at YellowStone Capital, a firm that offers alternative business financing. He has a very enthusiastic persona and he wishes to start his own business firm very soon.
- business plan image courtesy of source: http://pixabay.com/en/business-businessman-colleague-15498/
- too much space image courtesy of clive darra
- hiring family image courtesy of Barry Pousman
- now hiring image courtesy of Nathan Stephens
- poor marketing image courtesy of Melanie Edwards
- cutting prices image courtesy of Quinn Dombrowski
- hire an accountant image courtesy of Zoli Erdos
- 24/7 image courtesy of Nathan Stephens
- fast growth curve image courtesy of Rafiq Phillips