Anyone who has conducted business will tell you how challenging it is. After you create a viable product or service, the next step is to find a market willing to purchase. Then you get to scale your business and make critical decisions that define your company’s roadmap.
In essence, there is no silver bullet to success. However, there are common mistakes that many entrepreneurs commit – these take them off the road to success and onto the dreaded path of nowhere.
While there is value in learning from your mistakes, the following are some that can be avoided to keep down business costs.
Getting caught up in under-capitalization
New ventures are under-capitalized most of the time, which delays things. Not only you make less money than initially expected when this occurs, you may run out of funds to invest in building your company. The reason is that you didn’t have enough funds to begin with, so your business can come to a screeching halt if you drain capital and existing funds can no longer support operations.
To avoid this from happening, have a detailed business plan. This should allow potential lenders and investors to learn more about your firm and educate them to invest more. Spend time on the business plan and if you think you’ll need $50,000 funding, aim for $75,000. The business plan is critical to making sure your venture takes off as a start-up.
Not automating tasks
Entrepreneurs can spend can equivalent of 3 weeks a year dealing with payroll taxes, and businesses are often fined for making payroll-related mistakes. IRS has issued penalties of $4.5 billion for making payroll errors. Unfortunately, you’re opening yourself and your venture up to possible lawsuits and personal liability if you’re failing to automate tasks that require a lot of paperwork and include risks of human error.
Solutions that provide scalable knowledge and a team of tax professionals can help ensure filing timeliness and reduce errors in payroll filing and other similar tasks. Such options are great to free up your internal resources for other important operations, reduce system maintenance costs and eliminate high risk, low reward tasks. ADP.com also recommends keeping track of the daily rule changes in the tax code, which helps minimize risk for your in-house payroll.
Not making business relationships in writing
Conducting business without a contract could have dire consequences as the main purpose of a contract is to prevent lawsuits. A contract makes sure that you, your business partners, and contractors are on the same page as the terms of your agreement. Consider it as a way to protect your business relationships.
Make sure to have written contracts in place between all your business partners, clients, contractors and your business with terms and conditions highlighting what is being exchanged, who has the right over intellectual property, payment terms and cancellation clauses. Regardless of how well you think you’re in a relationship with a business partner, the relationship terms still need to be dictated and verified through contracts.
Failing to consider customers
You’re excited to launch your product, and feel everyone else should welcome it with open arms. However, this approach doesn’t consider the ways in which the market is becoming more customer-centric.
There are more choices available today than ever for researching purchase decisions. Anyone with a smartphone can look at reviews that inform their buying decisions. As a result, you should always think of every marketing decision and product from a consumer’s point of view.