We are always told that it is important to learn from our mistakes, but why not avoid making them in the first place if possible, especially in business, where mistakes usually cost money. Here are some valuable tips for those of you who are newcomers to the business world regarding the main mistakes you should avoid when setting up your first business.
Tip no. 1: Do not hesitate to close written business agreements with others
Many first time business owners make this mistake. But remember that in the absence of an established chain of authority, all parties involved will act in their own interest and this is bound to cause disagreement at some point. This makes corporations and LLCs preferable over business partnerships, regardless of the number of participants. They ensure the protection of personal assets by limiting the liability to the investment made in the business. You can draw a formal business agreement stipulating the nature of the contribution and compensation of each business owner regardless of the structure of your company.
Tip no. 2: Draw a formal business plan
First time business owners tend to overlook the importance of conducting research, of planning, of marketing, considering them to be plain excuses to not start the proper business activity. However, they could not be more wrong. Research and planning can save you a lot of time and money because it is the details that often count most.
Tip no. 3: Find the necessary financial support
Your credit history is an essential factor in the entire equation of obtaining financial support. Lenders are often reluctant when it comes to supporting start-ups and even more reluctant when it comes to funding businesses that are not supported by a proper business plan. Therefore, do not go into business without drawing a business plan in advance, whether you need funding from the outside or not. This way, you will acknowledge what it is that needs done before starting a business.
Tip no. 4: Know your competition
One of the secrets of your success lies in the uniqueness of your business. However, in order to be unique, you must know what your competitors are offering. The sooner you discover what your competition is, the lower the pressure and the easier it is to adapt. Otherwise, you may have to lower your rates suddenly, which means lower cash flow and less profit. Also, do not make the mistake of believing you have no direct competitors on the profile market because that is never the case.
Tip no. 5: Use advisors
Do not hesitate to hire advisors. First of all, you need a lawyer and an accountant. While the former will set up the legal status of your business, the latter will handle the book keeping. Their expertise will help you not be overwhelmed by the problems that might come with starting a business for you can rely on them to provide effective solutions to a variety of problems.