Starting your very first business is never easy, as there is a steep learning curve. While learning from your mistakes is part of the process, trial and error isn’t the only way to glean useful knowledge and experience. Observing other people’s mistakes and failures can also save you a lot of trouble in the long run. So, watch out for the following common pitfalls that can prevent you from creating a viable business.

1. Not Budgeting Properly.

Budgeting can be tedious work, but it’s also necessary as it provides a valuable tool for every small business owner. Your annual budget is a statement that projects your profit and loss for the following year. An accurate budget is essential as it will help you control your expenses and avoid overspending, which can be a common problem for people just starting. Keeping expenses in check is crucial as it affects profitability and cash flow and can help you build a healthy, robust business.

2. Ignoring Your Financial Statements

When it comes to effective business management, every number matters, and looking at your net income figure is not enough. You have to check the balance sheet, cash flow statements, and projections for your business. It takes practice to be able to interpret and evaluate all the data available, but this practice can help you stir your enterprise in the right direction. What’s more, financial statements are a great training tool for your employees, as they can introduce them to the inner workings of the business.

3. Failing to Implement an (Effective) Marketing Strategy

Contrary to popular belief, marketing is more than just advertising and promoting your products. Make a point of familiarizing yourself with all aspects of marketing: research, product development, pricing, labels, packaging (for physical products), distribution, as well as customer service, are all vital components of your business plan. Keep in mind that free marketing may not be enough. Set up some marketing campaigns, measure the results, adjust, repeat.

Remember not to neglect online marketing, as well. Your business needs a stable online home. It can either be your own website or a Facebook and LinkedIn page. Be active on these media and take every opportunity to engage with your customers. Marketing is all about helping your customers reach the decision to buy. Even great products and services can fail without the right strategy.

4. Forgetting (or Being Reluctant) to Delegate

If you plan on doing every single business task by yourself, think again. Even in a small one-person business, sometimes you will have your hands full and need outside help. Be ready to delegate, outsource, or hire employees when the need arises. After all, everyone has different strengths and weaknesses, so you can’t be as effective as you’d like if you spread yourself too thin. On the other hand, building a capable team will help you deal with many new challenges that you’ll meet as your business grows and prospers.

5. Not Seeking Legal Advice Right Away

Many small companies look for an attorney only when a legal crisis comes their way. However, a business lawyer can help you set up your business properly right from the start. Seeking legal advice from day one means you can familiarize yourself with the legal structure of your venture and ensure you are not (unknowingly) breaking any laws. Some of the things you should ask your lawyer about are contracts, licenses, permits, safety and liability, labor law, and intellectual property.

Being a business owner can often be very challenging and even frustrating, especially when starting out on your own, and making some mistakes is unavoidable. However, with forethought and proper planning, you’ll avoid grave errors that could cost your business. On a final note, don’t hesitate to seek help and advice from a business mentor. An experienced advisor can help you make a great start on the path to success.

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