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Common mistakes small business owners often make

On Behalf of | Jul 27, 2020 | Business Law |

Whether you started your small business, inherited it or purchased it, growing it to be a stable stream of income is typically the goal. As a new business owner with big plans but finite resources, you will likely get creative in the early days of operating the business in order to get the business up and running.

Being flexible with expectations, performing tasks that you would like to outsource in the future and slowly scaling up operations as income permits can all help small businesses make the most of limited resources early in their operation.

However, mistakes that you make early on can come back to haunt you and your company in the future, possibly with devastating financial consequences. Learning some of the more common mistakes that small business owners make now can help you avoid them.

Doing everything alone, and not formalizing employee relationships

Picking up staff is a big liability for a business, but it can also greatly contribute to its expansion and success. Trying to manage every aspect of running a business on your own can not only overwhelm and spread you too thin, but can lead to making mistakes that those with more experience or expertise would easily have avoided.

Having the right help is critical for a small business. Don’t make the mistake of hiring friends or someone recommended by people you trust without formally protecting yourself and the company. Even from the earliest days of operations, having thorough and specific employment contracts that limit your risk and liability while outlining your expectations for newly hired staff will be of the utmost importance for your business.

Choosing the wrong business form or none at all

Selecting the legal form you want your business to take is something best done early on, regardless of whether you’re building a new business or taking over an existing one. The structure you choose will influence everything from your personal liability if the business fails to the level of control you have over major decisions.

Marketing mistakes and spending mistakes are common

Marketing is a major investment, and many businesses choose to forgo marketing until they become successful. Unfortunately, reaching success without marketing can be difficult.

Your business will have a better chance of succeeding with careful and appropriate marketing to your intended client or customer base. Marketing should be part of your budget, and your budget should be carefully planned to avoid unexpected financial difficulties.

Ideally, you will have one to two years of operating expenses set aside, as well as personal savings or a separate stream of income so that you can avoid financial instability as you get the business off the ground.