Every year more people in the UK are starting their own businesses – and every year, there are many who fail.
However, the reasons they fail tend to be very similar, and if they had avoided the common pitfalls, their chances of success might have been much better. If you are thinking of starting a business, or if you’re just finding your feet as a startup manager, you need to be aware of what mistakes to look out for.
1. Skipping the planning
Entrepreneurs are often go-getters with high energy, and once an idea has taken hold, it might be tempting to jump in headfirst and set up a new business. Enthusiasm and confidence are great qualities to have, but first you need to establish what your plan of action is. Do you have a service or just a product? Who are your customers and how will you reach them? How much start capital do you really have? Do you have any investors? Before pouring your life savings into a dream, sit down and talk it through with a small business advisor. Despite what you may think, their job is not to discourage you, but rather to lay out a plan that will actually work and bring you long-term success.
2. Underestimating technology
As a small business owner, you will probably not be able to afford all the staff that a larger company has. Your competitor has a team of accountants, a marketing department, multiple salespeople, and all you have is yourself. Don’t despair; in this day and age, constantly-improving tech to assist you with pretty much anything you can think of. Whether it’s an app to help you run online marketing and sales, or cloud accounting software like Xero, you can streamline your business and run it on-the-go.
3. Ignoring the data
Whether your business is new, or you’re already established and growing, keeping a close eye on the data is crucial. It’s important to admit to yourself where you’re losing money, and where you’re gaining it – by being critical of your business, you can create key performance indicators and address your weaknesses. The data can also show you where your growth will be, and if you spot a large market for your product, it will help bring in investors because you have the evidence to back you up.
4. Growing too fast
You might be wondering why this point is here – after all, isn’t growth what you’re aiming for? How can growth be bad? Of course, financial growth is good, but ideally you want it to be sustainable long-term. If your product booms quickly, you might decide to hire a team, invest your savings, pour all your time into sales and ignore other aspects of your business. Then the sales take a downturn, and you are stuck with several people on your payroll, no solid marketing strategy, and your accounts are months behind. You did too much, too quickly. Pace yourself, and sit down with a business growth specialist who will talk you through the pros and cons.
5. Trying to do everything
If you want to run your business like an expert, every aspect of it needs to be done expertly. Now, ask yourself: are you an expert at taxes? How about audits? Do you understand the legal jargon on your term sheets? Refusing to pay specialists to help you out may save a little money in the short term but could cost you a lot further down the line. If your self-assessment is filed incorrectly, or your investors are entitled to more than you think, you could end up losing thousands or even face insolvency. If you get help from a small business accountant, you can spend more time focusing on the things you’re good at.
There are many London small business accounting firms around, but Berley Chartered Accountants been helping small businesses and startups for almost 30 years – and we were once a startup, too. More and more people are deciding to take the plunge and set up their own business – to give yourself a head start, why not call us on 020 7788 8261 or use our Online Form to arrange a no-obligation meeting and find out how we can help.