Starting a business is a huge moment in any entrepreneur’s life. It’s when you can put your passion into action, and hopefully turn your skills into a way to make a living.
But setting out on your own can also be daunting, and there are plenty of potential pitfalls along the way. To help you navigate the process of starting a business, we’ve compiled a list of the seven most common mistakes – and how to avoid them.
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1. Not having a plan
It’s crucial that every new business has a comprehensive plan. This document should include market research, clear financial forecasting, details of marketing channels, and benchmarks you can use to measure your progress.
The business plan is a living document – so once you’ve written it, you need to make sure you keep going back to it as you continue your journey. For more, read our guide to writing a business plan for a start-up.
2. Neglecting the legal side
It’s not the most exciting part of starting a business, but it’s really important you fulfil your legal obligations. If you’re operating as a sole trader, this might be as simple as just registering as self-employed with HMRC. However, you might also need to form a limited company, or talk to HMRC about things like Corporation Tax and payroll.
And, of course, make sure that you understand the key tax deadlines for businesses in the UK.
3. Ignoring the competition
If you’re going to succeed, you need to know what your competition is doing. Competitor analysis should be a key part of your business planning, but it’s an ongoing task. You should make sure that you’re keeping up-to-date with your competitors’ activities – what they’re selling, for how much, and to whom.
What is it that they’re doing well, and where can you carve out a niche or offer something unique? Remember that the answer might not always be to compete on price, as we’ll explore later.
4. Ignoring your brand
Branding is a crucial exercise for every small business and it’s only becoming more important. Your brand comprises many different elements – not just your name and logo, but also the tone of your communications, the customer experience, and even how the organisation itself is run.
At Simply Business we’ve spent years building an award-winning brand, and we’re keen to share our experiences. Some of our senior team have offered their top tips for crafting a brand. Read about choosing a great business name, some essential tips for building a brand that beats the competition, and our experiences in creating the UK’s best place to work (as recognised by the Sunday Times).
5. Getting pricing wrong
Pricing is a common stumbling block for new businesses. It can be very tempting to price yourself far lower than your competition as a way to secure new business. However, depending on your industry, this may not be the best strategy. Especially in the B2B sector, you should remember that clients and customers are looking not just at price, but also at value.
You need to identify what it is that makes your business unique. What do you bring to the table that your competitors can’t? How are you adding value? Or, if you’re offering a completely new product or service, how are you telling a compelling story about why it’s needed? By competing not only on price but also on product and service, you can help to maximise your chances of building a business that can thrive in the long term.
6. Forgetting insurance
Every business should consider insurance, regardless of its size. The exact insurance you require will depend on the nature of your business, but there are a few key covers you’re likely to need, including:
- Public liability insurance
- Professional indemnity insurance
- Employers’ liability insurance, if you employ people
With Simply Business you can compare quotes from a range of insurers, and combine all your covers into a single policy. Compare business insurance quotes today.
7. Making the wrong hires
Finally, as your business grows you’re likely to start thinking about hiring people. In a very small business, making the right hires is absolutely crucial, and you need to carefully consider the role you’re looking to fill.
What specific skills do you need, and what areas of the business do you need support in? How much can you afford to pay? And what sort of contract is best suited to your needs? Your first hire is a huge milestone for any business, but it’s also a high-risk endeavour.
You should do your research, write a great job description and make sure you’re asking all the right questions when you interview candidates.
What challenges have you encountered when setting up your business? Let us know in the comments below.