Starting your own business is an exciting step toward a more fulfilling professional life—one where you get to be the boss. However, it's important to plan this move carefully. According to FundSquire, some 20% of UK startups dissolve within their first year of founding. You don't want this to happen to you.
Educating yourself about the common mistakes made by small business owners will help you avoid the same fate. Consult this guide to get started.
For additional information on starting a thriving UK-based business, trust Elvis Eckardt. We offer recruitment and sales solutions designed to help entrepreneurs like yourself achieve success. Visit our blog for more resources like this one.
Choosing the wrong type of business entity
Registering your business as a formal legal entity will make it easier to separate your professional and personal finances. In the UK, you can choose from a variety of business models. Complete Formations highlights the most popular options, including sole trader, partnership, limited liability partnership, and limited liability company. The type of entity you choose will impact everything from taxation to ownership structure, so do your research.
Not hiring the right team to support business success
Your employees are critical to your business’s success. Some small business owners make the mistake of relying on family and friends to fill key roles at their companies. However, mixing personal and professional life can cause complications. Trust an expert recruiter like Elvis Eckardt to build the team you need. They offer recruitment, HR services, psychometric profiling and more. With their holistic approach to hiring, you can be confident in your team.
Failing to accurately calculate overhead costs
Starting a business takes money. But just how much money? Figure it out before you commence operations. Write down all of your anticipated overhead expenses and tally up how much you expect to pay each month. This will help you determine key points like how much you should charge for your product or service, and what sales volume you need each month to turn a profit. Simplicable provides a list of overhead expenses for inspiration.
Implementing an inefficient payroll system
Employee wages will be a significant monthly expense that you should keep strict watch over. You don't want to risk disorganized payroll, which could result in late payments to workers, leaving them dissatisfied and unmotivated. Invest in a high-tech payroll service solution with automatic scheduling, same-day deposits, and tax filing capabilities. Software like Quickbooks offers cutting-edge tools for accounting that can help.
Not keeping track of what the competition is doing
You probably aren't the only provider in your market offering your goods or services. It's helpful to keep an eye on the competition. BrandUNIQ explains that a competitive landscape analysis lets you do just that—and provides a quick guide to how you can conduct one. For example, you might study your competitors' websites, follow them on social media, and subscribe to their mailing lists. Note their success and failures to inform your own strategy.
Failing to plan for emergencies
Even with advanced planning, unexpected events can derail a business’s success. The COVID-19 pandemic attested to this fact. According to The Gazette, 12,557 companies went insolvent in Wales and England in 2020. You don't want your business to contribute to these figures. Setting up an emergency savings fund can help. Less Everything recommends businesses have at least three months of cash within the business to cover costs in case of emergencies.
The above list of common business mistakes isn't meant to scare you. Consider an educational tool of what not to do. Understanding these common problems will help you avoid them and increase your odds of long-term success in the business world.
by Courtney Rosenfeld
Courtney started Gig Spark to be a resource and the first step for people who are looking to join the gig economy, either to supplement their income or as a way to fulfill their dreams of becoming an entrepreneur.