Five Mistakes A New Business Might Make

Having your own business isn't an easy task yet most people believe it is yet they are too scared to do it for themselves. For those people that do start their own business it is inevitable that they will make mistakes along the way. Hopefully these mistakes will not be too costly to the business but none the less they will happen. This article explores five common mistakes that businesses make in the hope that new and old business owners don't make them in the future.

Under estimating

A huge mistake that a lot of businesses make is to under estimate. It is very easy to make figure look pretty to impress a board of directors, bank manager or investor yet in doing this you could be setting yourself up for a huge fall.

It may sound like a ridiculous thing to do but people do this every day so always ensure that if you are budgeting for any reason make the figures realistic no matter how bad they look. If the figure look bad then you can be certain they are bad. Rather than make them look good and lose in the not too distant future it is much better to drop the idea, move on and succeed.

VAT

One thing no business needs is the VAT man on their back. If your business is small and doesn't have the luxury of an in house accountancy department make sure you keep on top of your books and more importantly the VAT.

A common mistake that small businesses make is to forget about the VAT. When looking at the accounts it is easy to forget that the balance you are looking at has a VAT element included. This money can and does get spent and then your business is landed with a VAT bill that it cannot pay. The best thing that you can do is setup a separate bank account and every time you receive revenue transfer the VAT element out into that new account then there will be no problem when your VAT bill arrives.

Quick Expansion

Expanding quickly isn't necessarily a bad thing and in most cases it is great. The mistake that is made is expanding quickly before the time is right. This is more difficult to judge than other mistakes as expansion usually follows a burst of extra work so usually comes from perceived necessity.

Before making that leap to expand the advice here is to take a step back and look at it from an external perspective. Ask yourself the question "can we really afford to expand and what would happen if we do and then it goes wrong?" if you can answer this question honestly then go for it.

Always read the fine print

This one may sound like common sense but in the heat of the moment happens day in and day out. People do not always read contracts that they sign properly and as a result can and do end up in messy legal battles further down the line.

If people read contracts thoroughly at the beginning then everybody would know where they stand and there would be no unnecessary court battles.

Choosing the wrong staff

This is another difficult process that is hard to judge. If as a business you get this wrong it can be very costly. In order to help you ensure you get it right spend more time on your recruitment process. There is a huge shift towards online recruitment now and there are lots of websites out there offering it at very reasonable prices. Going to an agency will ensure you get a better class of candidates as they are usually vetted for suitability before you receive the CV's.

Make sure your interviewing process is as good as it possibly can be and make sure anybody you employ fits your company well as the staff will make or break your company. Good staff are worth their weight in gold.

The advice given above will hopefully help new and established businesses succeed in whatever industries they are in.


Copyright (c) 2011 Jamie Lyons