Many people think when they start a business things will be linear. They believe their growth will either steadily progress in a flat line, which is generally a start-up phase of one’s business, or they will experience exponential growth due to a launch or large contract. While both may occur, business is more like putting a pen in a 2-year-old’s hand and asking them to draw a line from one side of the paper to the other. You’re going to have everything but a straight line. That’s the life of your business. You will have ups and you will have downs. To provide you with help starting a business, we’ve gathered a list of nine things you must avoid:
1) Thinking You Are Your Own Boss
I can say from personal experience that when I first started my business, it felt great. I left Corporate America to fulfill my own dream and be my own boss. I quickly realized that I definitely wasn’t my own boss. In fact, I had more bosses through starting my own business than I did working for a company. Every customer of mine and every client of mine — ALL of them are my boss. If they say jump, I ask how high. I’m the one providing a service to my clients, so I need to listen to what they say. If they don’t like how I’m doing something with the business, I need to consider making a change. Without customers and clients, you don’t have a business. So, thinking you’re going into business for yourself and that you’re the boss, couldn’t be any further from the truth.
2) Thinking You Can Build a Large Company Alone
Many start-up businesses have only one owner or member. As the sole member of your business, you feel as if you need to take on everything related to your business: from social media, to sales, to accounting, to marketing, etc. As you grow, your time is more valuable in certain areas of the company. Time spent doing accounting, while necessary, is holding you back from further growth because it’s consuming too much of your time. Your time might be spent more wisely if you were out sitting down with prospects or clients and growing sales. Don’t be afraid to hire someone or ask for help. And once you alone can no longer keep up with your book of business, it’s time to bring on a sales force. The sales force can exponentially grow your business when compared to you trying to do it alone. Think of it as cloning yourself. A multi-million-dollar business was never built by only one person, it requires a lot of help.
3) Trying to Do Everything
When starting a business, it’s common to see new entrepreneurs trying to do everything in order to bring in revenue. They spend their day scattered all over the place, from sales and marketing, to providing services, to managing their employees. You need to stop right there and run some reports. Look at your business as a whole after a few months and see where you are making the most money. The Pareto principle states that in most cases, 80 percent of your revenue is going to come from 20 percent of your business. Cut out the 80 percent of your business that isn’t creating growth and focus on the 20 percent that is in order to see exponential growth. Spreading yourself thin just to make a few extra bucks isn’t worth the time invested. Fish where the fish are and stop wasting your time and resources on projects that aren’t worth the minimal revenue.
4) Quitting Your Full-Time Job Too Early
The worst thing you could do as a start-up is cut off cash flow. Quitting a job that is providing income to you and your family is a terrible idea. Refrain from doing so until you’ve started your business and it is viable. Stopping your income can not only choke out your business due to lack of funds, but it could lead you down the rabbit hole that can financially crush your personal and family life. Putting your home at risk by running out of money is not something anyone wants to go through. Keep the money coming in from your full-time job until your business is doing well enough that it can provide for your family while still having enough cash to run your business.
5) Not Checking to Ensure Your Business Name Isn’t Already Taken
Many people create a great business name and start promoting their company, just to be handed a cease and desist letter since another business already owns the rights and has that name registered. You now just wasted money purchasing business cards, signage, posters, banners, apparel, etc. that you can’t even use. Do a business name or entity search online before you start your business to ensure it’s not already being used and could put you in the middle of a legal battle to kick-start your new business.
6) Using Your Personal Checking Account for the Business
If you want to set yourself up for a world of confusion, use your personal checking account for your business. You’ll find yourself spending way too much time sitting down and looking over your account to figure out what transactions were due to your business and what were personal. For that reason, it’s best to open up a dedicated business checking account. Now you are able to transfer money from your business account into your personal account through a member draw (assuming you set up your business as an LLC). Having separate accounts also alleviates potential headaches from trying to show separation come tax season.
7) Not Using Contracts
As embarrassing as this is, learn from my mistake. When I started my business, I came out like gangbusters and took on as much work as I could get my hands on. At that stage I hadn’t created contracts yet, and I was naïve to think there are people out there who wouldn’t pay for the services they received from me — boy was I wrong! I had one client in particular for whom I wrote copy and invoiced them $1,500 — which I was never paid. That was nearly a year ago, and I’ve had to take the loss on the chin and chalk it up as a learning experience. My attorney and CPA both told me I could fight it, but it wasn’t going to be worth it in the end based on the time and money I’d have to spend to recover the funds. So, don’t make the same rookie mistake that I made, ensure you have all your contracts in place prior to doing business with ANYONE. That might mean you’ll need to pay your attorney to draft them for you, but it’s money well spent. And yes, it’s wise to send contracts to friends that you might be doing business with. Business is business and friends should understand that from a legality standpoint.
8) Not Utilizing Social Media
Do you like the word FREE? Who doesn’t? Yet, there are still people out there who are against social media. I encourage anyone who is not currently using social media to consider it for your business. Social media is a great way to get your business out in front of potentially millions of people. Facebook, Instagram, Twitter, and LinkedIn are all great social media platforms you should be utilizing to network and grow your business. Through your social media platforms you are able to post news and information about your business, product launches, sales, etc. Not to mention, you get to interact with your customers on a daily basis. Doing so allows you to create a relationship with your customers. The fact that you can do all of this without money coming out of your marketing budget is spectacular.
9) Not Utilizing Technology and Software
This section goes hand in hand with #8. Social media can be extremely time consuming and some companies will even hire someone specifically to run their social media presence. It’s understandable that you might not be able to afford to pay someone to manage that piece of the business for you. For that reason, you can use technology to streamline your platforms. There’s an app called Buffer that I would highly recommend. It’s free and also has a paid version if you wanted more features. This technology allows you to schedule your social media posts to automatically launch at a certain date and time. Not only that, but you can pick and choose which platforms you want it to post on. If you have a post you want to publish on all your platforms, you can upload it to Buffer and it will hit each of your social media sites through just one scheduled post — quick and convenient! Technology is your friend as a business owner. It can streamline many parts of your business and free up time so you can spend it on growing other areas.
Ready to start your business with this advice in hand and the protection of both your company and personal assets? Be sure to form an LLC (or Corporation) for your business to start off on the right track. With an LLC, you’ll receive a number of advantages, including:
- Limited Liability Protection
- Pass-Through Taxation
- No Ownership Restrictions
- Versatile Tax Status
- Flexible Profit Distribution
- Minimal Compliance Requirements
Incfile can help you form your LLC with our quick six-step online formation process. Check out our three, simple packages — starting at $49 a month + state fees.
Latest posts by Matt Weik (see all)
- Important Leadership Skills for Business Owners - September 11, 2018
- #BOTM: This Entrepreneur is Building Better Healthcare Through Technology - August 30, 2018
- Becoming a Strategic Leader - August 28, 2018