Starting up a new business can be an exciting time. However, it’s not a simple process and there are a number of pitfalls which should be avoided if you want to ensure your launch is a success.
Very rarely does any business just ‘start’ trading. Quite often it can be weeks or even months before the cash starts rolling in. Have you got funds to cover living expenses in the meantime? Beware as well of costs that you probably haven’t even considered. If you’re shipping goods, how much will this cost? Will you need an additional telephone line for your business? A lot of these relatively small costs can mount up. You need to try and plan for every cost at the outset of your new business.
Whenever you have a new idea for a business, invariably the first people you’ll ask about it, is your family and friends. With the best will in the world, these people will want to support and encourage you, and nobody will want to tell you “That’s a bad idea”. It is far better to ask other business people, a mentor or contact your local council for information on business support services.
No demand for your product or service
What the country really needs is… Watch any episode of Dragons Den and invariably there’ll be a whole raft of crazy ideas or schemes that you’ll see are absolute non-starters. It’s easy when you’re looking from the outside in, to see whether an idea might have legs or not. Try to be objective about your own ideas.
Whenever you start your business, it’s really easy to say to yourself, well, although I’m doing this, an offshoot could be this and of course we can do that as well… Be very careful of diversifying too early in your business. If you want to do wedding cakes, put all of your effort and marketing into wedding cakes. When you’ve got your market base clearly established and operating like a well-oiled machine, then think about all the other possibilities.
Starting a business is tough. Really tough. Especially if you start off working from home, like many businesses do. It’s really easy to catch up on last night’s Eastenders, or pop out for a coffee with a friend. You have to go into your new venture aware that to begin with, you have to work HARDERthan you did when you were working for somebody else. When you’ve got the business up and running with systems in place and your band of happy minions running everything, you can relax a little bit. In the meantime, it will be work, work, work!
Unless you keep a really tight eye on your income and outgoings, and have a plan about your growth you can end up in real trouble. Your profit margin is really, really important. You might decide to do a discount of 20%, but if you don’t pay attention, it might end up costing you to sell something!
Tracey Kelk from Lucentum Business Services is a Chartered Accountant who provides help to start-up and small businesses with accounting and tax (and more!).