Business Mentor: Avoiding costly mistakes when starting a business

Armando Bartolome

Posted at Jul 31 2021 08:46 AM

Starting your own business is exciting. However, in your enthusiasm, you may overlook several things that may affect how the business will run in the next months.

Before you open a business, you need careful planning. You need to find the best location for the business, know the best kind of products and services to be offered, and identify the target market. 

If your judgment is overshadowed by excitement, instead of growing your earnings as the months pass by, you may see your funds declining to the point of almost having nothing left to use.

To prevent this from happening, here are some tips for those who are about to start their businesses.

1. First and foremost, you must write down everything that you need to spend on so that it is easier for you to work within your budget. This lets you become more aware of what needs to be prioritized. Be meticulous in tracking all your spending on a weekly basis.

2. Don’t overdraw from your personal account. Limit your use of personal funds to support your business because that should be intended for emergencies or for retirement. If you use some of your personal money for business use, ensure that you will pay yourself back.

3. Don’t neglect professional advice. You may think that starting a small business is a piece of cake. At some point, it may be not so difficult, however, if you are a first-time entrepreneur, there are “nooks and cracks” in the business which you may not be aware of. 

Hence, the best way to have a better perspective about handling a business is by seeking assistance from a business consultant. The business consultant will act as your guide and provide you an in-depth discussion of what to expect and how to steer your business towards your goal. 

4. Hire others to help you. Starting a business can be overwhelming. Even if you think you can do everything on your own, there comes a time when you cannot do every task on time. Consider hiring someone who can act as your right hand, a person who you can trust. Delegate tasks especially when the business becomes busier. Don’t think that it is an added expense on your part because eventually, it will make everything easier and lead to profitability.

5. Don’t underprice. You may think that reducing the prices of the products and services offered would attract more customers. Maybe. However, others may also think that what you offer is substandard. You must figure out the right price wherein you should consider the following:

Determine your fixed costs (overhead costs) and direct costs (the expenses incurred by producing and delivering the products and services).

Know what your customers want from your products and services. Are they likely to buy at the cheapest price or by the value that they receive?

Know how you want to position your business – expensive, luxurious, cheapest, or somewhere in the middle.

Check on your competitors on how they are doing in the market. A little snooping may be of help. You want to know what they are charging for their products and services and the level of service that goes along with it.

Never just randomly place a price tag on your products and services without much thought. You need to consider how much it costs for a product or service to be delivered. Similarly, you should also add value to your own. Remember that for every product and service you provide comes along a piece of yourself – your time and effort.

Many startups fail in the first 6 months of operation because they did not take these into account. Now that you are aware of all these, it may save you tons of money and an enormous amount of time.

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