Most businesses fail often from lack of proper planning at the outset. You should note that financial pitfalls are one too many and new businesses should avoid them in order to survive. And since it is still a new business, chances are high that it is trying to fight competition as well. Below are the top mistakes new business owners should avoid:
Starting business with a large loan
Most business owners are fond of borrowing large amounts of money from banks, home equity loan or friends. This is a big mistake because as you start off owing lenders so much money, you feel pressured to make quick profits. Rely mostly on savings when starting a business; you will not have high monthly payments on loan.
Planning on making profits right away
You are advised to have a reliable source of income because many small businesses are not profitable within the first two years. The source of income should sustain you during the start up periods.
Hiring employees you don’t need
While it is not wrong hiring employees, it can become costly especially now that you are subject to registration and record keeping requirements. Unemployment taxes, federal income taxes and complying with safety regulations are some of the expenses you have to foot in yourself. Consider hiring an independent contractor instead.
Renting space you don’t need
It is not always necessary to rent a space. This is true especially when starting out. Try and work from home because this way, you are going to save on taxes.
Maintaining the status quo
Just because your business has been running well for the last two years does not mean you should maintain the status quo. Many things change and before you know it, competition has taken its toll. There are advances in technology, changes in working procedures and customers want to see improved services or new products. Consider investing in newer software for small business as well as phone systems for small business and change your working procedures in order to succeed.