What mistakes do first time business owners make?
There are several.
1. Failure to get accurate and timely financial information. A bookkeeping consultant should be hired to set up the chart of accounts and provide monthly financial statements on an accrual basis.
2. Failure to understand the financial side of the business and properly interpret financial statements.
3. Failure to understand the difference between profits and cash flow.
4. Failure to properly lead and manage employees and hold them accountable.
5. Failure to realize that as the business grows it will require more formal management and systems.
6. Failure to plan. Where are you going? What are your goals? What are your projected financial statements and cash flow?
The combination of the above is the primary reason why businesses fail. Entrepreneurs are good at starting companies and not so good at running them.
Go to www.60minutecfo.com and download the Business Mastery workbook which will allow for both analysis and forecasting of financial statements. Then call or email the nearest SCORE chapter and ask for assistance and guidance in starting a company. All of this is free and excellent help!
Business startups fail when they don't focus marketing efforts precisely enough on the primary target audience. The worst thing any business can do is assume "everyone" is their client. Just not true and wasteful of limited time and budget. A successful startup is highly focused on their best customer only and not the general public as a whole.
The product or service offered must solve a problem OR be extremely attractive as a luxury BUT each of these has to be something others are willing to pay for (convenience or perceived value) and not just something of interest to the company founder. Just because you want it and are willing to pay for it doesn't mean anyone else will.
Ultimately, a lack of focus on the best client and unrealistic expectations that everyone thinks the same as your founder(s) leads to ineffective positioning, messaging and delivery channel plan. That will do nothing but waste time and money.
What Kyle said is important. I would say also that you have enough money to capitalize your company for the time it takes to obtain revenue.At that point live meagerly and put everything back into your company when it comes to your time and money ...reinvest ..reinvest.reinvest...
Products must solve problems for the demographics your going after. They have to be priced accordingly as well.
This is a great question and I hope you get zillions of diverse answers.
There are two kinds of expenses: short term for payroll and inventory; long term like a delivery van or computer system.
There are two reasons to borrow money. A line of credit and a term loan paid back over many years. Namely, short term and long term uses, respectively.
New business owners who mix them up run into trouble.
I'd say tunnel vision, that is you ignore feedback and just have an inward belief in your business. Belief isn't a bad thing but ignoring what the market says is, just look at (if you're UK-based) Woolworths, Homebase to name a few brands who didn't listen.