Five Common Mistakes Made By First Time Business Owners

So you’ve finally decided to take the plunge and go into business for yourself. Congratulations! As a next step after this momentous decision you should definitely contact SCC so we can make sure your venture reaches its full potential and doesn’t fall into these traps…

Top 5 Mistakes of New Business Owners:

1. Poor Market Research

According to CNBC, many business owners assume that their product is so great is will have no competition in the market place. Even if you are the only purveyor of your product (say, the only maker of natural fiber kitchen sponges) there are still other products that can fulfill the same use (dishrags could work just as well). Research the competition and figure out how to differentiate your business.

2. Unrealistic Product Prices

Every business owner knows the marketing power of having a lower cost than your competitors. Special rates certainly attract business but can be so pricey for your bottom line that you’ll be put out of business. The moral of the story as put by Microsoft Business is to give your product or service a smart price from the start. You’ll actually make a profit- which is what this whole business thing is about. As Brian Hamilton of Inc.com said, “If you price low at the start and then later have to charge more as your operating costs grow you will offend and lose many of your early customers who think the increase is unfair.”

3. Borrowing More Than You Need

When it comes to microloans you can get an offer of up to $50,000 in funding. If you don’t need it, don’t take it. More money might mean nicer office furniture now but it also means a nice chunk of interest added to your loan payment. Price out only the necessities to start especially if you’re getting the money from someone else.

4. Forgetting to Write  A Mission Statement

Why does your business exist? Where do you want it to go in the future? What ethical boundaries won’t you cross? If your business has no missions or goals it’s just kind of…there. There’s no benchmark your working towards to keep you focused and the employees certainly won’t care about the future of the company. Brainstorm some clear cut visions for your company. Write the good ones down and put it in your business plan.

5. Working Solo

The idea of being one hundred percent in control of everything is tempting. But, admit it now, there are just things you aren’t equipped to do. SCC business advisor John Clement always advises our clients to hire an accountant to look after their business’s finances. Is your product at risk for trademark violation? Find someone who can give you the best legal advice to protect it (Google does not count). In addition to licensed professionals you might just need to hire someone to keep the office in order. Don’t hire three secretaries because you can, but if someone could offer real use to your business (social media know-how, great sales pitches) then bring them on board. It will keep you a lot more sane than doing everything on your own.

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