Business ideas are hard to come by. So when you see your business idea turning into an actual company, you will want to do everything in your power to make it successful. Part of that success will come from avoiding common pitfalls such as these:
Trying to do everything
One common mistake business owners make when they are just starting out is trying to do every part of the process themselves.
It may be hard to delegate the work, and understandably so. Your business is your baby.
You started it from nothing and want to be involved in every part of the process. While it’s perfectly understandable to want to enjoy and control everything your business is doing, you will get burned out if you don’t split the workload (source: Maui Mastermind).
Another problem with controlling everything yourself, aside from business-owner burnout, is that the company needs to be able to run independent of your presence. If something happened to you, what would become of the company?
Part of delegating duties includes implementing a system that would allow your business to survive without you. One option is to take out a life insurance policy for yourself and other key members of the business. Another option is to set up a successor to replace you should something happen to you.
Having too much debt
Unless you have already been successful with a career or have a lot of family money, you are going to need a loan to get your business up and running. However, beware of taking a loan out for things that are not necessary, or for taking out a higher loan than you need. Try to pay your loans off as quickly as possible.
If you are in over your head with debt, talk to a banker or a financial planner about your options. Consumer proposals in cities like Toronto can help business owners who have accrued too much debt.
A consumer proposal “provides a debtor with a simplified streamlined method to settle their debts with creditors without filing an assignment in bankruptcy” (source: Paddon & Yorke Inc.). If your debt is less than $250,000, a consumer proposal may be a good option for you.
Not covering legal bases
It would be a shame for your company to do well and start turning out an impressive profit only to have it shut down or heavily fined due to legal issues. Make sure you know the legal guidelines your company has to follow, including necessary permits, taxes, and worker treatment.
Know the difference between types of employees such as independent contractors and in-house employees.
Consult a legal professional before you get too set in your ways. That way, you can avoid everything from minor violations to major litigation. The fees of hiring an attorney will be worth keeping your business in the clear.
Skimping on business plans
When you have an idea for a new product or service, you might be tempted to jump into production and implementation, rather than sitting down and making plans. If you don’t take the time to flesh out the business plans for your products, you can find yourself with problems such as too much supply and not enough demand—which is bad news for your finances.
Take the time to calculate product/service costs, run some market tests, and make financial predictions before you set a new idea into motion.
As you get your new business up and running, you don’t want to look like a rookie. Avoid these pitfalls, and your business will take off without a hitch.
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[…] one of the elements that can make business ownership complicated is combining funds between business and personal monies. This practice is an easy one […]