It’s an era that doesn’t seem to be slowing up, but creating a start-up is by no means straightforward. In fact, one only has to look at the sheer number of these new businesses that fail in their first few years to really see the difficulties that they face.
Unsurprisingly, financial prudence is key during this period. It also won’t come as a surprise to read that there are several common mistakes that are made during that “start-up period”, and this is going to be the focus of today’s article.
Mistake 1 – You don’t invest in an accountant
Whether it is 3 Wise Bears or a completely different company, we really can’t stress the importance of “investing” in an accountant.
Why do we coin the term, “investing”? In short, these professionals can save a business money. They know all of the ways you can save your company money, whether it is through tax savings or some other form of paperwork. Those start-ups that opt against this advice will be paying through the nose for their financial mistakes.
Mistake 2 – You opt for “nice-to-haves”
It doesn’t matter whether you have been bankrolled by multi-billionaire investors, or if you are trying to scrape cash yourself together – the rules remain the same. As a start-up, there’s no place for nice-to-haves. You might fancy that plush new office space in the big city, but in reality, you just don’t have the income to pay for such a luxury.
Instead, focus on the essentials, and if you do start to size up you can then think about luxuries such as the above.
Mistake 3 – You forget about your own income
Your new business might not be losing heaps of money – but is it providing you with enough to live on? After all, up until this point you were most probably raking in a comfortable salary, which has now evaporated.
This is where planning ahead is crucial. It might be in relation to forecasting realistically, or it might be all about how you have put enough savings aside for those first few months where your income will have inevitably dwindled. However, you simply must take this into account. If not, your business might be in the black – but this just won’t be enough to keep it alive.
Mistake 4 – You expand too quickly
If you have got to a position where you think expansion could be on the horizon, then a huge congratulations is in order.
There is a caveat, however. Expanding a business is tough, and things can get out of hand very quickly. Costs can escalate, and that forecasted growth can sometimes simply not happen. As a start-up, you need to tread very carefully and ensure your numbers are completely accurate before even contemplating such a move.
As yourself if your current setup can withstand an expansion and if it can’t, what do you need to build to make this possible?