Behind every success are the messy bits— the trial and error, the up-all-nighters, and the failed attempts. That is what every success story tells us. Unlike highways, success doesn’t come with shortcuts and a smooth road. In all probability, you will experience a failure or two before you get to say, “I finally made it.”
Yes, failures are inevitable and necessary. They build your character and make you perceive the bigger decisions that are vital to your business. However, there are such mistakes that must be prevented as early as possible so as not to cost time and effort (like not spending enough money and not delegating tasks).
As early as possible, you can take preventative actions by becoming aware of how these mistakes can damage your business goals. Take a look at these four common mistakes that most start-up entrepreneurs make.
1. Having a too low-margin
You might be tempted to settle for a low-margin business. After all, customers love a low-cost product so your option is to sell very close to the price of the production cost. However, settling for less might jeopardize your business’ survival and growth.
Having less money caused by lower gross margin will affect the operational costs of the business, including marketing expenses and administrative salaries. Over time, this can take a toll on your business’ growth.
In an attempt to keep a low selling price, your business might also resort to finding less expensive suppliers. If you fail to find one, there’s a high probability that you will experience ongoing negative cashflow. Failure to counteract might even cause your business to close doors.
Take a look at your production costs and see how much flexibility there is. If you can’t reduce the cost in the future, be sure to choose a higher profit margin to accommodate the costs.
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2. Poor accounting practices
Poor accounting practices can make a thriving business go back to square one. Imagine how much crueler they can be for start-up businesses. The best thing you can do is to identify the poor accounting practices and set up a countermeasure to prevent such mistakes from causing commotions.
Some poor accounting practices include not keeping track of your expenses. Keeping track of your expenses is a must because it allows you to see your business’ growth, note your deductibles, and build financial statements. If your receipts are all over the place and you are not keeping a logbook, then, chances are your project will go south.
The best way to avert this mistake is to invest in high-quality accounting software like QuickBooks or Sage Business Cloud. These two accounting software packages can save your business from poor practices such as losing track of your expenses and mixing up your personal and business finances. They have all the accounting features your business needs, from invoicing to cloud accounting.
Read: Best Accounting Software for Small Businesses in 2021 (Paid and Free)
3. Failure to estimate budget
This mistake can be seen in two opposite ways— either you’re not spending enough money or you’re spending too much. Whether you are the former or the latter, poor budgeting can make your financial goals much more difficult to achieve.
To keep it simple, poor budgeting can result in a lack of savings, less financial security, and unruly spending. In addition, it increases the likelihood of your business going into debt.
You can overturn your business’ fate of failing by implementing smart budgeting. Aside from relying on your accounting software to do the job, you must set up an emergency fund. It will be your saving grace if worse comes to worst.
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4. Lack of marketing
One of the most common mistakes start-up businesses make is the divesture of a marketing strategy. Sure, your reason might be the start-up capital being too tight. But eliminating the marketing aspect from your business will only cause you more money in the future— if you want to save your business from bankruptcy, that is.
Without marketing, your business would rely solely on the merits of your products or services. If the customer likes your product or service, they can amplify a wave of customers through word-of-mouth. But starting out small in a sea of bigger competitors, the word-of-mouth tactic can only be as effective if your products are satisfying enough to make your customers feel the need to recommend it to others.
Let’s be honest, flashy, and witty marketing can cover up just about every mediocre products— that’s how most successful businesses thrive. Your product or service may not be the best but good marketing is enough to entice people to try it at least once. Some of those first-timers might even turn into loyal customers if they come to love your product.
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