Starting your business: Five mistakes to avoid
Did you feel overwhelmed when you started your business? Did you feel like there was so much to do, but there was no way you could do it all by yourself?
Or
Are you looking to start your business and have so many people giving you advice on what you should or shouldn’t do?
Five mistakes to avoid when starting out
Not having a plan
If you don’t know which direction you’re supposed to go in, any direction will do, but that will not get you the satisfaction of achieving the main purpose for which you started out your business.
So, knowing exactly why you started your business and then putting together a plan of how you’re going to achieve that is of utmost importance. We’ve already touched on the importance of a plan in another blog. (Business plans: Why the hype? | Santos Business Services (santosbiz.co.za))
Most importantly, the plan will guide the decisions you take in your business.
Taking on too much debt upfront
Not all businesses need large amounts of investment to get going. Starting small and growing as you build a reputation and brand are just as important.
If you need to borrow large amounts upfront, you must have a clear plan on when and how the repayments are going to be made.
Should the repayments commence too early, it can place your business cash flow under severe pressure as you may not have begun to bring in the sales sufficient to sustain operations and repayments.
Also, borrowing should be for large, fixed assets and a small percentage may be for initial working capital.
Mixing business and personal expenses
Most small business owners like yourselves have their business as their only source of income. Because of that, you often make personal payments out of your business account if you even have separate accounts.
This is very common must be eliminated or kept to a bare minimum as the personal expenses usually are not allowed by SARS as a business expense and increases your profit on which you must tax.
Discounting your products or services by large amount
Manufacturing your new product or even providing your service comes with a cost. When you price your product or service, you must be able to cover that cost at the very least and also cover some fixed costs in your business.
When you discount your product or service, you do two things:
- You are reducing the amount of money you have to cover your costs. Continued discounting will create not only a cash flow problem, but also lead to your business making a loss.
- You lower the perception of your product or service in the eyes of your customer. Cheap is usually correlated with low quality, whilst most quality products or services are priced higher. Positioning yourself at the lower price point will lower your customer’s perception of your product or service, even before they have purchased it.
Not marketing your business enough upfront
Many small businesses underestimate the power of marketing. Those initial sales are critical to getting some money into your business, but most importantly, your chance to get the word out there, that you’re open for business!
If you opened a corner bakery shop, many people may see you as the “new store”, but they may not come through your door.
But on the other hand, you could print out flyers inviting the local community to your launch day where they can come and get free testers to everything you bake and buy at a discount for that day only.
You get your staff to drop them at local businesses and drive around the suburbs handing them out to residents. Even if they all don’t turn up at your launch, they will all now know about your corner bakery store!
How can we help?
Enquire about our tailor made packages to suit every stage and size of business and let’s get to work with you on your business!
Get in touch with us by sending an email to hello@santosbiz.co.za or Book a Call with us now.
