Common mistakes new business owners make

When you start a business, you have the benefit of experience from thousands that have gone before. Whether it was a lemonade stand or a Fortune 500 enterprise, there are people who have walked the same path, and they have all learned valuable lessons.

If you’re new to the entrepreneur ‘thing’, you might fall into traps that are easy to avoid, and that could jeopardise your whole business. Think ahead, and watch out for these pitfalls from day one.

Splashing out too soon

Smart offices and company cars are signs of success to some, but get your priorities straight. If your company is in the early days of trading, it’s best not to be too extravagant.

The more you spend initially, the harder it is to maintain a healthy cash flow, and that could spell trouble for your business. Keeping a cash reserve is tricky when you want to look professional, but a little care now will help to put your business in a financially secure position.

Over-purchasing IT

A few years ago, starting an office-based business meant kitting everyone out with a computer. You’d also need to buy a couple of servers, and probably some other infrastructure, like tape backup. In order to cope with growth, businesses would ordinarily purchase far more than they needed. This represented a considerable spend.

Thanks to cloud computing, there’s no need to over-purchase IT equipment or infrastructure. Small businesses are tapping in to virtual infrastructure and hosted services, buying only what they need, then scaling up when required. If you choose to use public cloud services, you’ll get great performance, low cost, and the elasticity to cope with growth and peak demand.

Signing up to too many contracts

Web hosting, telephone services, software packages and mobile phones: all of these things come with contracts. Sometimes, contracts stretch years into the future, with no chance of a get-out clause or downgrade. If you’re not careful, you could end up signing away a huge chunk of your income each month. It doesn’t have to be that way.

Many services can be purchased on a rolling contract basis, meaning that you’re only committed for a maximum of a month. Not only does this prevent you from expensive lock-in deals, it also means you have the freedom to upgrade when you like.

Damaging your brand on social media

For small businesses and sole traders, the pressure to interact on social media is huge. Yet these services can drain time and energy from your core business activities, and it’s easy to get distracted while you’re trying to market what you do.

Social media is an ever-changing world, and there’s no one-size-fits-all answer. But try to avoid overstretching yourself with too many accounts. Customers don’t expect you to be everywhere when you’re just starting: find them, use their preferred platform and stick with it over the long term. Spreading yourself too thinly is a sure sign of trouble ahead.

Deep breath… Go!

Starting a business sounds daunting, but it just requires a sensible approach. The most important thing you can do is protect your cash flow by making sensible financial decisions.