Running a business can be the most exciting and rewarding job you'll ever have, but it can also be incredibly risky. According to a study by the National Association of Self-Employed Persons, approximately 241% of small businesses fail within the first two years, and more than half (521%) are forced to close their businesses within the first four years of operation.
You will have more success in business if you avoid some of the following common mistakes:
Make hasty decisions.
Every day, more and more people want to start their own company because they want to be their own boss and have control over everything in the company. But this business is not always the right choice. According to Mr. John Gullman, director of USBX Consulting in Fort Lauderdale, before starting a business, you should ask yourself: "How long can you sustain this business, or can you make money in other ways?"
There are many risks involved in starting a new company. But the biggest concern for business leaders is the possibility of losing control of the company. That’s why you need to protect yourself. According to Mr. Gullman, you should spend time hiring a lawyer to advise you on business registration and protection instead of wasting time trying to start your own business.
Lack of clear business relationships.
“Most managers make the mistake of thinking they will be successful in handling personal relationships from the start,” says John Giordano, a partner with Bush, Ross, Gardner, Warren & Rudy, a Tampa law firm.
Questions will inevitably arise about who is responsible for what – the financing or the business plan. As such, written contracts are key to improving business relationships. Documentation can help clarify the roles and responsibilities of existing business partners, stakeholders, lenders, consultants, and anyone else with an equity stake in the business.
Insufficient capital.
Lack of capital is a major reason why many companies go under. Even if a company has always been concerned about ensuring working capital, many business owners face a sudden shock when they learn how much money they need to keep their business afloat. Investments in equipment, hiring workers, business licensing fees, and countless other essential expenses add up quickly. As the saying goes, “It takes time and money to keep a business running smoothly.”
Mistakes in trade promotion.
When a business is in financial trouble – either down or in a recession – advertising spending is often one of the first things to be cut to make way for more necessary expenses. And unfortunately, the short-term savings from promotions to pay for employees’ salaries are often not enough.
Attracting and retaining new customers is paramount to any business. That is why it is essential to develop a promotional plan to promote your company in newspapers, magazines, radio, the Internet, television, direct mail, and other local media. Decide what percentage of your budget you will spend on advertising in each medium, and if possible, stick to your promotional plan.
Repeat your mistakes and oversights.
Business owners always try to be diligent and it is difficult to avoid making the same mistakes. To avoid any negligence that can lead to mistakes, the first solution is to recognize what those negligence are and learn useful lessons from them.
It is important to remember that even the most successful and typical businessmen make at least two of the above mistakes. But they have learned from them and overcome them easily. And that is also a valuable lesson for you on the thorny business path.
