When getting into business for yourself you want to make sure you don’t make the same mistakes that you often hear others have made which resulted in the business failing. Now some things will happen time to time that you can’t ever expect, but can prepare for. You are strong and you will deal with it – again, as long as you come to business prepared.
Over the last little while, we spent some time working together with entrepreneurs who started with UKStartups, and others that have been able to successful start form just an idea to a well developed and successful business. They did it through careful planning, funding search and straight forward guidance. We asked these entrepreneurs to come up with a list of the most helpful small business do’s and don’ts that can help you in your own small business.
These Do’s and Don’ts are a combination taken from Starting a Small Business, to Business Planning, and to Searching for Funding. The more you know, the more you can overcome.
- Do consider risk versus reward. Business ownership is a balance between the reward of success and the risk of failure. Each individual must define success and consider how much risk is tolerable.
- Do take the time to write a good business plan. It is very important not to skip this step or rush through it. The time you spend planning before you open your business will pay off in the long run.
- Do understand that starting and operating a small business is extremely time consuming and can be very stressful.
- Do keep in mind that a new business can be very demanding on your personal financial resources. If you are having trouble making ends meet personally, starting a business will likely make the situation worse. Remember, the new business owner is the last person to get paid and often does not get paid.
- Do pay your taxes. There are heavy penalties for late payments and can file liens, seize assets, or even close the business if taxes are not paid. As a business owner, you must be knowledgeable about your tax responsibilities.
- Do understand the government regulations that affect your industry as well as the costs associated with complying with the rules and regulations.
- Do have a clearly defined target market. Understanding your potential customers will help you in determining the demand for your product or service and enable you to develop a more successful marketing strategy.
- Do be prepared to use your own money to start your business. Most businesses are started with money from personal savings, family, or friends. Keep in mind that lenders are usually not willing to loan you all of the money needed to start the business.
- Do determine whether or not your business idea is feasible before going into business. Developing a business plan which includes financial projections is essential in determining the feasibility of your business idea.
- Do consider working with professionals such as an accountant, bookkeeping service, and/or an attorney as part of the cost of doing business and include those costs in your budget. Most people who avoid the expense of using professionals for specialized services make mistakes that cost them both time and money in the long run.
- Do consider accessing government funding from your local, regional and national government. Remember that many funding agencies provide funding for new startups.
- Do determine the types of records you will have to keep for tax purposes as well as for management control before you start the business.
- Do have your bookkeeping system in place before you open your business. Consider working with your accountant to help you establish that system.
- Do apply to many funding programmes (private and government) and never limit yourself to only one programme
- Don’t assume the financing process will go quickly. Allow plenty of time to obtain financing. Keep in mind that obtaining a business loan is more involved than obtaining a personal loan.
- Don’t underestimate the costs of starting and operating a new business. It is important to obtain actual price quotes related to starting and operating a business. Don’t just estimate!
- Don’t over project sales. A common mistake is to be overly optimistic regarding expected sales levels in the first year of operation. Keep in mind that it often takes longer than expected to build sales. Therefore, it is important to be conservative.
- Don’t forget to budget for adequate working capital for your new business. The cost of starting a business isn’t limited to the actual costs for equipment, inventory, fixtures, etc. You will also need to make sure you have enough funds for operating expenses as you build the business.
- Don’t underestimate the length of time it takes for a business to be ready to open. This is especially true if construction is involved or specialized equipment must be ordered. Keep this in mind when determining the amount of funds required.
- Don’t underestimate the competition. Many new businesses too narrowly define their competition and don’t really understand the number of businesses that are competing for their potential customers. Be sure to consider both direct and indirect competition.
- Don’t underestimate the amount of marketing (and time) required to build a customer base in a new business. You must develop a good marketing plan in order to reach your market and convince them to purchase your goods/services.
- Don’t assume there is demand for your product or service. You must research whether or not adequate demand for your product or service exists.
- Don’t assume that you can obtain a grant or government funding to start your business.
- Don’t assume you will be able to obtain a loan. Obtaining a loan to start a new business can be challenging.
- Don’t use all of your personal resources to start your business now and assume you’ll get a loan later for the rest of the money you need once you get the doors open. Keep in mind there is never a guarantee that you’ll be able to obtain a loan. In addition, lenders often view this situation as poor planning.
- Don’t sign leases or contracts before financing is in place unless those agreements are contingent upon receiving financing.
- Don’t assume that your workers can be independent contractors. Many small business owners assume they’ll save money by classifying workers as independent contractors rather than employees.
- Don’t underestimate the value of employer-provided benefits such as insurance and leave time if you are currently employed. Many people believe that they can make more money on their own rather than working for someone else. However, you must calculate the costs of supplying your own benefits, for example, when considering whether or not to own your own business.
- Don’t rely on positive comments by friends and family to determine if you have a good idea for a business. These comments are rarely honest feedback and are based on assumptions rather than research and fact.
- Don’t depend on someone else to write your business plan. This is your business. Once you have a basic plan in writing, seek an outside evaluation or review of that plan.
- Don’t apply to just one funding programme and if denied, leave it alone. Instead, keep applying.
These are the popular do’s and don’ts taken from top entrepreneurs who were able to find success in starting, launching and funding their businesses in the UK.
We hope that from this list you are able to take away something that will ensure you do the right thing and don’t make the same mistake.