Striking out on your own isn’t easy. Slow bureaucracy and hiccups in the process make it even harder. However, every new business is a learning experience, and you can make the most of it when you do your best to be savvy every step of the way. The things you need to know as a small business owner can (and do) fill entire course catalogs, but doing your due diligence ahead of time can equip you with the tools you need to see your business thrive. Here are a few common mistakes that could cost you your business!
Cutting Corners on Branding and Design
Hiring a professional designer can cost thousands of dollars, and there’s no guarantee that even after hours of paying someone, you’ll wind up with a design that embodies your vision perfectly. And then there’s the fact that the artistic side of things usually looks easy from the outside, and fun enough that you want to be closely involved yourself.
Well, as hard as landing on the right logo and design is, it’s worth investing in early on. Consistent branding across the board is essential for your business’ success. Most studies show that the design of a logo (colors, font, shape) is even more essential for sticking in customers’ heads than the name is. Doing dramatic redesigns at the beginning stages of a business can make you lose traction and fall off the radar for your clients, customers, and potential investors. That’s why the sooner that you can land on an effective and permanent design, the better.
It’s also important to remember that you need to trust the advice of a professional. You might think that as a dabbler, you have a good idea of what makes one logo more successful than another, but the nuances of hue and serifs can be more complicated than that. A good logo can be the difference between a $40,000 company and a multi-million dollar one.
Keeping Sloppy Financial Accounts
We all know that the financials are important in business, but few of us have the attention to detail necessary to keep things organized properly. When you’re in business for yourself, you might feel like you have free reign to handle accounts, bills, and budgeting however you want. However, there are many times when shoddy accounting will come back and bite you in the ass.
Keeping clean and organized records from the get-go will help you to:
- Get the most out of your tax deductions.
- Be better at adapting to market fluctuations and feedback from customers.
- Keep your financial records in compliance with GAAP regulations so that you can smoothly integrate investors and public trading as your business grows.
Doing It Yourself Instead of Calling a Pro
Most startups operate on a shoestring budget, and it’s true that as an entrepreneur, you’re going to have to be conversational in a lot of professional basics, from small business law to accounting. However, it’s important to know when it’s more beneficial to call in a pro. Think about it: navigating your way through city regulations and setup fees could take weeks or months. The same list of tasks might take a really good lawyer an hour or two.
So, when you’re looking at hourly rates while hiring a professional, don’t just think about how much it costs, but how effective their time is. And, of course, how important your own time is. There are a million things you need to do. If you can hand over some complicated tasks to someone else, it’s worth a few lines in your accounts payable.
Misunderstanding Business Organizations
There are four major types of business entities:
- Sole proprietorship
- Limited Liability Companies (LLC)
- Corporations (Inc. or Corp.)
Many small businesses begin as a sole proprietorship or a partnership (depending on whether it’s a joint venture or an individual one). However, as a business grows (and sometimes even before it grows) it’s important to incorporate it. When a business is incorporated, it means that it’s a separate legal entity, removed from any founders or owners, and therefore responsible for its own debts and liabilities.
The two major forms of incorporations are LLCs and Corporations (which can either be S corporations or C corporations.) Some early business owners go into deciding what form of business to use without doing all their research, just opting for what is easiest or cheapest from the get-go. However, the form of business enterprise that you choose will have a big impact on your growth, flexibility, and personal liability, so it’s important to choose well.