Being at the beginning of a business adventure is one of the most exciting places to be. You believe that you have the right product or service, and you just can’t wait to get it on the market. There are hurdles in the way, but they all seem possible to overcome. You can’t wait to see the money start rolling in. There’s nothing wrong with this whirlwind of feelings, but it can be very easy to get caught up in them and forget about some of the really important stuff. We’re going to take a look at some of the most common pitfalls that new businesses fall into and how you can avoid the same thing happening to you. So, keep your enthusiasm high, but use a little caution.
Too Much Too Soon
There’s absolutely nothing wrong with going into your new business with confidence. Believing in yourself is part of what makes a great entrepreneur, but there is such a thing as too much self-confidence. Being realistic about the amount of capital that you have access to is essential. If you’re starting up a restaurant and you’re relying on being booked up from night one in order to make your rent, then you’ve taken on far too much. This was a pitfall that one of the most famous Australian chefs fell into right at the beginning of his career. Luke Nguyen took on a restaurant that was far too large and really struggled to make ends meet for quite some time.
For him, he managed to turn things around, but he needn’t have put himself in a such a difficult situation. It’s far easier to test the market with something like a food truck, or a supper club, before jumping right into owning a restaurant. Think wisely about how you can make the most of your money in the early days and take a slightly cautious approach. You can always scale things up, but it can be hard to scale them back when you’ve signed up for a long lease.
Having an Unclear Target Market
If you don’t know who you’re selling your product to then how can you possibly start selling it to them? A surprising number of entrepreneurs don’t thoroughly understand their target market before they start their business. Particularly if you’re the kind of person who invents brilliant things, or has a very creative mind, you might love coming up with incredible inventions, but not be quite sure who needs them. There’s nothing inherently wrong with this, but if you’re starting up a business around selling one of these inventions then you’ve got to bring on some help to ensure you can accurately identify your target market before investing money into producing and marketing your product.
Sometimes your target market for a certain product might be too small to create a large enough business to sustain the framework that it needs to support it. It’s in these instances where selling the patent for your product could generate more money in the long run, which brings us rather neatly onto the next point, the legal stuff.
Leaving The Legal Stuff Until Last
Unless you’re a lawyer who’s turning their hand to a new business venture, the chances are you might feel a little out of your depth with some of the legal stuff. Unfortunately, whatever business you’re starting, there’s going to be some legal paperwork that needs to be done and it’s best to get it out of the way sooner rather than later.
If you’ve invented something that you believe is going to be revolutionary, then you absolutely need to apply for a patent. If you’re employing people to work for you, looking for investors, or entering into business with a partner then you’ve got to have a watertight contract that keeps everybody safe. This will take a while and maybe some money in the short term, but it could save you an awful lot more money and a serious headache in the long term. Think carefully about copyright. intellectual property, patents, contracts, and any other legal paperwork before setting any other wheels in motion.
As we briefly touched upon earlier, keeping your expenses manageable is essential for a new company. One of the ways that you can do this is by initially keeping your team very small. It might be that you can’t make the business work alone, but you also probably don’t need a full-time team behind you. Think about hiring some people who will bring a lot to the business on a part-time basis.
As well as this, there’s a good reason that so many people choose to keep their work life and their home life separate. Whilst starting a business with a friend might seem like a good idea, it’s much easier to overlook the flaws in people that we already like. If you’re absolutely set on working with your friends, then be honest about the skills that they have and find part-time people to fill the gaps in their resumes.