This blog post was found on www.localbusinessadvisor.co.uk and I reproduce it in full here. Food for thought!
10 common start-up errors
Every new business owner kicks off with big dreams - but it's essential to keep your feet on the ground and avoid the kind of mistakes that cause around half of start-ups to close down within three years. Here are ten of the most common errors to look out for
- Bad planning. The lack of a business plan, or a poorly executed one, will drastically reduce your chances of getting funding. It can also leave you underestimating the running costs of your business and overestimating what you can achieve. Make it a priority to write a comprehensive business plan.
- Over-optimism. Positive thinking is good but believing your market to be bigger than it is, or that customers will pay over-the-odds for your product or service, is foolhardy. Rigorous market research will help set your sights at a realistic level.
- Splashing the cash. Over-investment in property, plant or other fixed assets can lead to cashflow problems, as can over-stocking. Think carefully before making major purchases and carry out efficient stock control.
- Easy credit. Offering customers and suppliers credit terms which are too lenient can leave you, again, with cashflow difficulties. Carry out thorough credit checks and make credit terms clear. This is especially important in today's uncertain economic climate.
- Ignoring the bottom line. Concentrating on turnover rather than profit is dangerous. You can use up your financial reserves and find yourself unable to fulfil orders - in other words, you'll be over-trading. Slow and considered expansion is preferable.
- Dependence on a single customer. Concentrating on one big customer or supplier will leave you at their mercy. They could go under, choose to go elsewhere or start dictating terms. Spread your risk.
- Appointing the wrong people. Your employees are one of your business's major investments. Choose your people carefully. You should be sure enough of their abilities to delegate with confidence.
- Overlooking the competition. Setting up your own business will consume most of your time and energy - but you should never take your eye off competitors. Remember, too, that competition can come from unexpected directions.
- Complacency. Interest hikes, instability in overseas markets, changes in the regulatory landscape and technology leaps cannot always be anticipated. You need to have reserves to weather difficult times and consider new directions if necessary.
- Failure to acknowledge your limitations.Taking independent, external advice from experts such as accountants, lawyers or business advisers is essential. Don't assume you can do everything yourself - the most successful entrepreneurs know when they need help and seek it out.
