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8 Start-up business traps every Entrepreneur must avoid

There is no shortage of individuals with great ideas. There is, however, a massive shortage of individuals who can execute on great ideas.

The gap between idea creation and execution is often not the fault of the individuals with the ideas, most of whom are working full time, possibly raising a family and have limited resources and skills to get started. More often than not, the would-be entrepreneur simply has no experience with starting a business.

All the time and money in the world won’t make your new business succeed if you fall into one of these six small business startup traps. But no matter how much time and money you put into starting up, your new business could fall flat on its face if you aren’t aware of and take steps to avoid these common business traps:

1. Not Having a Business Plan

If your business is small and simple, you may wonder why you need a business plan. That’s something for Apple, or Marks and Spencer! Not true.

A business plan helps you focus on your goals and sets a timescale in which to achieve them. More importantly, it makes sure that you know the parameters you’re working within – your strategy, your goals, your competitive advantages, what sort of financing you’re going to need, your likely outlays and sales projections, and so on.

If you put all these basics down in writing, you have a great resource to refer to for staying on track, or at least understanding when you’ve gone off track. It also gives you a reference point for analysing where and why things went wrong if events don’t turn out to plan.

2. Doing Too Much Yourself

As a small business owner, it’s very tempting to put yourself at the heart of everything. After all, it’s your baby, your vision and your effort that got the business to where it is. Naturally you want to be involved in every detail.

This sounds fine until you unexpectedly fall ill, or have some other sort of emergency, and suddenly the wheels start to come off.

Every small business owner needs trusted partners and staff who fully understand the business and how it runs. If there are contacts (suppliers, clients, etc) that are vital to the business, make sure that their details are somewhere easily accessible, and that staff know where to find them.

Write down key dates in a planner (along with any relevant associated information) so that everyone knows if an important deadline or event is coming up.

3. Failing to Plan Ahead

One of the easiest traps to fall into is not planning ahead. You’ll often find it difficult to carve out enough time to look forward, but you should – particularly if you’re busy.

Fail to plan and you’ll find yourself facing substantially more unexpected problems than you need to. Short-term events require more detailed planning obviously, but you should have at least a skeleton plan for the year ahead in place so that you can map out future actions appropriately.

4. Ignoring the Small Problems

As every skier knows, if you ignore warning signs long enough, sooner or later you may just fall off a cliff. Part of the skill in running a small business is spotting the early signs of problems before they become a crisis.

It’s all too easy to dismiss genuine red flags as “teething problems”, either because you’re full of optimism, or because you just don’t have the time or inclination to look at what’s going on.

Small business owners have to be pragmatic. You have to be able to look at your company objectively and identify issues as they arise. Ask yourself: is this running as it should, and if not, why not?

Seemingly trivial items demand attention as well. The big stuff won’t happen unless you get the small stuff sorted out and, left to their own devices, those minor items can become very major indeed.

5. Getting Your Capitalisation Wrong

Unless you know your line of business inside out, the chances are that there will be a few financial surprises along the way.

We’re all made one of two ways – either we are tempted to under-spend, or to spend too much. Neither is good. Your company needs enough resources and capital to survive and thrive, so being too cautious can seriously impede your progress.

On the flip side, throwing money around is also bad. It’s easy to think, well, I should have that big car so people can see I’m doing well, or that top-of-the-line copier, or the uber-expensive smartphone. But if your business can’t bear the costs, that sort of thinking could tip you over the edge.

Try to find out how much it took for other similar businesses in your circumstances to start up. Sites like smallbusiness.co.uk are useful places to start looking. Figure out your average annual sales and expenditure. Don’t forget small items like stocks of headed paper, wrapping materials, postage etc.

6. Over-Solving Problems

You know how it is – something goes wrong, and you want to smash the problem into oblivion so it never, ever surfaces again.

For example: you hire someone and they turn out to be completely wrong for the company. As a result, you find yourself giving the third degree to anyone you interview as a replacement, treat them with suspicion, or over-manage them.

Resist the temptation to over-correct. By all means examine the process that led to your mistake to see if it can be improved, but don’t overdo it. You could well create another, entirely different problem.

7. Not Getting the Basics Right

In the beginning, small businesses are often carried forward by enthusiasm, but as time goes by you will find that there are processes – ordinary, boring but absolutely vital processes – that have to be mapped out for the business to run properly.

As your business grows, every employee has to understand exactly what they should be doing and how they should do it. If they don’t, your company can quickly go badly astray.

Every business needs sufficient detail for a framework that ensures all staff are able to produce what is expected of them, at the right quality and cost, and to deadline.

8. Losing Focus

As the old saying goes, ‘a bird in the hand is worth two in the bush’ – in other words, if you neglect your main business to go chasing possible opportunities, you could end up in deep trouble.

As your business grows, it’s really important that you stay focused. There may be all sorts of tempting opportunities offered to you if your business shows signs of success, but you will need to evaluate these with the same care that you did your original business proposition.

 

The Next Step

Starting a new business can be tough. Sleepless nights, stress and anxiety are often constant companions for new entrepreneurs. So it is important to be able to avoid the most common traps that could otherwise knock us off-course. This article gives you some of the worst and not only that, gives you ways to side-step them.

 

Credits

 

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http://knowstartup.com/2016/11/traps-entrepreneur-must-avoid/