As a new business owner just starting out, it’s important that you give careful consideration to all your business decisions. Yet, many new business owners make irreparable mistakes when they’re barely out of the starting gate. Here are the four most common mistakes new business owners make, and what you can do to avoid them.
1. Skipping Idea Research
When you have what you think is a brilliant business idea, it’s tempting to run with it before anyone else has a chance to turn it into a successful business. The problem with this is that in many cases your “unique” idea has already been done. If you go ahead with your idea without checking to see if something similar is already on the market, you run the risk of patent infringement, which could land you in legal hot water.
Don’t be afraid to do everything you can to see if your idea has already been done. If applicable, hire a qualified patent attorney to do patent research on your idea. The relatively small fee for a patent search might save you tens of thousands in a patent infringement lawsuit.
2. Waiting to Hire Employees
When you’re just starting out, you understandably don’t want to burden your business budget with an expensive payroll. You may be choosing to do as much as you can by yourself in order to avoid hiring employees and paying payroll taxes. That can be a huge mistake. It can leave you scrounging for employees if you all of a sudden get hit with too much work to handle alone.
Instead, consider hiring independent contractors to handle your business workload in the beginning. As ICs, they won’t be entitled to employee benefits, and you won’t be required to pay payroll tax on their earnings. In addition, you won’t have to guarantee them any minimum amount of work, and can simply hire them on a contract basis.
3. Expanding Too Early
It’s exciting when your new business takes off and you have plenty of profits to prove it. But don’t be tempted to expand too early in your new business. You might not have been in business long enough to see how you handle the storms that come along, like economic slowdowns, market share losses and more.
Wait and see what the future holds a little before expanding your business. You also want to build up a substantial amount of savings to offset any potential losses from expansion.
4. Borrowing Too Much
Successful businesses usually have very little trouble getting loans. Business loans can be very helpful, especially for a new business with a lot of capital expenses. But borrowing too much in the beginning can set you back and sabotage the future of your business.
Instead of borrowing, consider finding other creative solutions for your immediate business needs. Maybe outsourcing your needs is a good solution until you can afford to buy your own equipment.
If you can avoid making these four most common mistakes that new business owners make, you’ll already be ahead of the game. Remember to always think long-term when considering the needs of your business. When you do that, you’ll be able to avoid a lot of trouble in the short term.
“Remember, wealth has nothing to do with money, success has everything to do with failure and life is as simple as you make it!”