5 Common Mistakes to Avoid When Starting Up
Many people are considering to start their own business and the lack of experience can lead to some common mistakes in the start up process. Here are some of the most common mistakes:
1. Not having any backup plans
A typical startup entrepreneur has usually prepared a business plan but sometimes their expectation might be too optimistic and circumstances might not work in their favor. This is why it is recommended to have prepared not only a good business plan but also some backup plans.
The backup plans should be planned as a rescue operation for the case when things are not going as expected. In case the business startup fails a backup plan should assure an exit strategy and some ways to recover at least a part of the money invested.
2. Not building enough business relationships
Every new business needs to have a minimum audience of potential customers. Minimum Viable Audience (MVA), which is the bare minimum audience of potential customers that you need to be able to support your business. The entrepreneurs have to build relationships with loyal referral partners and clients.
One of the mistakes some startup business owners make is to not spend enough time on building relationships that can help developing their business. Relationships are an important tool in any business. Any business owner has to create a personal networking plan and work on developing useful business relationships.
3. Not saving enough funds for emergencies
Many new business owners don’t keep enough funds for emergencies. There are such situations when clients may be late with payments, the enterprise needs to spend unexpected large amounts of funds, or the business suffers losses from damaged stocks. To be protected from these kind of circumstances and be able to survive the business needs to rely on emergency funds.
4. Not focusing enough on short term
Sometimes it is possible that the new business owners set up some long term goals and they forget to focus on the short term priorities, such as getting clients, or having a smooth cash flow.
5. Not buying business insurance
A startup business requires big investments and sometimes the new business owners try to save on expenses as much as possible in order to manage their business finances. However, one aspect that should not be forgotten is buying business insurance. Insurance is not among those expenses a business owner can cut in order to save. Business insurance is important in order to protect the small enterprise from any negative circumstances.
There are many types of necessary business insurance policies. A general liability insurance provides protection if you, your products or services, or your employees cause property damage or bodily injuries to a third party. Property insurance offers protection against damages of your business assets, such as inventory and tools, computers, office equipment, or business buildings. Commercial auto insurance covers your commercial vehicles. Business owner’s policy offers a comprehensive insurance package including vehicle coverage, crime insurance, liability insurance, property insurance, and business interruption insurance.
Start-up Budget 101: 5 Key Aspects of a New Start-up Budget
Venturing out on your own with a start-up can be intimidating, but it can also be an exciting time that is ripe with the promise of opportunity and success. While there are numerous steps that you can take to promote the success of your venture, the fact is that how well you manage your business will be critical to its overall profitability and its ability to compete in the marketplace. If you want to ensure that you have taken all steps possible to promote success, you can consider following some of these tips.
1. Set Goals on a Daily Basis
The best business leaders are those who can develop a vision for their company, and you may have already developed and refined your vision and business objectives by preparing a well thought out business plan. However, a business plan is not something to place on a shelf to gather dust. Instead, it should serve as a guiding plan for your activities on a day to day basis. Regularly visit and revisit your business plan to determine what daily steps you need to take to accomplish your goals. While you may have short and long-term goals, it takes baby steps through daily effort to reach those milestones. Therefore, set goals on a daily basis, and ensure that you work toward these goals. Furthermore, share the goals with your team so that your entire organization is working together as a unit to achieve specific goals.
2. Focus on Relevant Activities
It is easy for business owners and their employees to become overwhelmed and bogged down by mundane, day to day activities. Some of these may be entirely relevant to the future of your business or to its success, but some may be entirely irrelevant or unimportant. It is important to consider what the best use of your time and your staff’s time is. Regularly monitor your activities, and ask yourself if the tasks that are being worked on actually are important in some way. If they are not, you should reshape your activities and move forward to activities that are more productive and effective for your company as a whole.
3. Hire a Great Team to Support You
Some start-ups will begin with at least a few support staff members on the payroll, and others will eventually hire a few team members over the course of the first year or two. Regardless of when you hire your team members, it is important that you select the best professionals for the job. While education, experience and skills are vital, it is also important to choose individuals who have internal drive and motivation and who may be committed to their job. These may be professionals who will deal with customers and who directly impact company image, but their hard work will also affect how many other employees you need to add to the roster. Essentially, the right team members can support you in a cost-effective way and can help the company to grow. Therefore, do not make hasty hiring decisions.
4. Outsource Specific Tasks to the Experts
Regardless of how many employees you have working for you, you should always consider the importance and benefits of outsourcing certain tasks. Some business owners will spin their wheels trying to become a veritable master of all trades. After all, a successful business must have skills in finance, accounting, marketing, IT and many other areas. As a business owner, you may be an expert in your field, but it does not mean that you are an expert in everything. It is often most time-efficient and cost-effective for you to focus your efforts on running your business and handling the tasks that you already know how to do, and you can outsource other tasks to professionals who are experts. These ultimately will help you to focus on running your company and growing it, and it will prevent you from becoming overwhelmed in activities that essentially can be performed by others far more easily.
5. Invest in Technology
As a final point, you can consider investing in technology for your benefit. Everything from time management tools for attendance and payroll support to accounting software, web management programs and more can help you to become more effective in your position. Technology has transformed the way business owners function on a daily basis with great results. There is no longer a need to actively perform certain tasks, collect data, analyze it or perform other functions because technology is available that completes these tasks for you.
Management is an essential skill that you must have if you want your company to be successful. Even if you are not a natural leader with innate management skills, you can improve your management skills considerably in a number of areas when you follow some of these important tips.
Naming Your Start-Up Business: What You Need To Know
As the recession finally abates and the world economy begins to recover, US graduates with bright and innovative ideas are finding this the perfect time to launch their own businesses. The name of your business is extremely important as it forms a customer’s initial impression.
Here are some tips on how to legally register the name your new business.
What’s in a name?
When choosing a name for your company there are a few golden rules you must follow:
- keep the name short
- make the name memorable
- make sure the name describes the business
- the name must be attention grabbing
Another important consideration is that your chosen name must not be misleading to customers or imply something about your business that is untrue. For example, you can’t say that you offer professional services if you don’t hold relevant professional qualifications and credentials.
To complicate matters further there are specific rules surrounding naming your business depending upon its type, i.e. sole trader, limited company, corporation or partnership.
Sole traders
Sole trader companies are assumed to operate under the name of the owner. If this is not the case and you are using a different name for your business, you’ll probably need to file a fictitious owner affidavit also known as a ‘DBA filing’. This document informs the public and the local authorities that the business is operating under a name other than that of the real owner. This document is usually filed with the County Recorder of Deeds’ office, and you can obtain the necessary forms from there.
Partnerships
Naming of businesses owned by a partnership is similar to the rules surrounding sole trader companies. If the business is going to operate under a fictitious name, you’ll usually need to file a DBA with the County Recorder of Deeds’ office, although in some cases you’ll have to lodge the paperwork with the Secretary of State’s office.
Limited partnership
If you are intending to trade as a limited company, you’ll need to reserve your business name with the Secretary of State’s office via a Certificate of Limited Partnership. The name you choose must be unique. If you’re unsure whether the name you want is already in use, call your local Secretary of State’s office to check if it’s available before you fill in all the paperwork.
Limited liability companies
As with a limited partnership, a limited liability company name must be reserved with the Secretary of State’s office. The name you choose is generally reserved when your articles of organisation are filed. You must include the letters LLC (limited liability company) in the name.
Limited liability partnerships
Limited liability partnerships (LLPs) are usually only available to certain professions like lawyers or doctors. They are only recognised in a limited number of states too.
Corporations
A corporate name must be registered with the Secretary of State’s office. The name must be unique in order to be reserved. Before you file your application paperwork, give the Secretary of State’s office a call to find out if the name you want is available. The name must include the words, ‘limited’, ‘corporation’ or ‘incorporated’ or some phrase indicating that the business is a corporation.
DBA filing
If you plan to use a name other than your own for your business, you have to make a DBA filing. If you don’t, you can’t legally start trading. Also, your bank won’t allow you to open a business account unless your DBA filing is complete.
You can register as many DBA names as you like but there are a few restrictions. Your chosen name must not mislead the public. In other words, you can’t say that you are a professional plumber if you are not qualified. You’re also not permitted to use terms like; Inc., Corp., or LLC etc if your company is not filed as such.
Registering your company name via a DBA does not mean that someone else cannot use the name in the future. Registration by DBA just means that you’ve informed the general public who is actually behind the business.
In conclusion
Selecting a suitable name for your fledgling start-up is an exciting and sometimes tricky task, and it’s important to take the time to register your company name correctly and legally. If you don’t, you could find yourself back at the drawing board.
Start-up Budget 101: 5 Key Aspects of a New Start-up Budget
Before opening a new business, it is vital to prepare your budget. The budget will help you calculate your monthly operating expenses and give you an idea of how much money you’ll need each month. As a new business owner, you’ll need to have enough available funds in your account to cover at least the first 6 months of your operational costs. This gives your business time establish your customer base.
Everyone who opens their first business has problems making a monthly budget. There are different expenses that you’ll need to pay each month. However, after you closely examine your budget, you’ll find that certain aspects of your business need a larger piece of the funds. Therefore, when calculating your new budget, it’s pertinent that you pay close attention to these five key areas of your budget.
Rent –
Each month paying rent is an essential budgetary concern especially if you need to occupy an office space in a prime location. However, before calculating your rent it’s best to calculate the percentage of your revenues for rent.
Mobile Payment –
If your business sells online, it’s mandatory you provide your customers a mobile payment option. Therefore, you’ll need to have an ACH merchant service in place to accept mobile payments. Furthermore, this service needs a well-integrated point of sales system. Each month you’ll use a good portion of your budget to pay for mobile pay equipment, services or app development.
However, you look at it; you’ll need to pay this expense monthly.
Insurance –
Business insurance is important for any start-up business. However, it’s not easy to determine how much insurance your company will need. Therefore, before purchasing any insurance you’ll need to consider the number of employees and if your employees will drive for your company. Furthermore, you need to estimate your projected earnings for the next three years. This will help you estimate how much insurance your company will need.
Expansion –
Every new business owner forgets to budget for growth and expansion of their business. Therefore, it’s necessary that you set a portion of your monthly budget aside for future growth and expansion. Afterwards, when your company grows, you’ll have the necessary funds available to meet these needs.
Disaster Funds –
Even though your company is covered by insurance, it still doesn’t mean that the insurance will cover all your major expenses when a disaster strikes. Therefore, each month you’ll need to set a portion of your budget aside to meet your needs. Estimate how much it will cost to move your location or order new inventory.
Conclusion
Creating a monthly budget for a new business owner can be devastating. Many first-time business owners don’t understand how to budget for the unexpected or hidden expenses. Therefore, it’s vital to your existence that you pay close attention to these five critical areas of your budget. If you don’t have the necessary funds available to expand or your business or recover from a natural disaster, your business will fail.