Starting a new business can be an exciting and nerve-wracking time. The thrill of introducing your product or service to the world can be clouded by the stress of long to-do lists. Getting your marketing in order. Hiring employees. Finding the right name for your business. All of these things are important decisions that can impact your new venture.
As crucial as these tasks are, new entrepreneurs often forgo other details which can help them succeed.
Who would know better than the people who frequently work with business start-ups? We asked several MidWestOne bankers about the most common mistakes new entrepreneurs make when opening a business. Here are a few of the mistakes they shared, and a few ways they can be avoided:
Have no separation from competitors. There are over 29,000 shoe stores in the United States. They provide comfort and style for your feet. If you are going to open a new shoe store, you have to find a way to stand out from your competitors. Renee Smith-LaBarge, Business Services Manager, says, “You have to set yourself apart from your competition. If you can articulate your business’s unique capabilities, you will distinguish yourself from the ordinary.”
Don’t create and follow the business plan. Some business owners do not create a comprehensive business plan, which can be a costly mistake. The more detail a plan has, the clearer the vision for the success of the company. Some owners create a business plan for the sake of getting one finished. Then, they rarely utilize the strategies they created. When there is a plan that maps out what it will take for the business to succeed, why deviate from it?
Overestimate revenue or underestimate capital needed to start and grow a start-up business. When drafting your business plan, banks will want to know all of the details. That includes income statements, monthly cash-flow, annual cash-flow, and balance sheets. Some believe this section is the most important part of the business plan, so they recommend spending around 80 percent of your time working on it. Second Vice President of Commercial Banking Adam McLaughlin says, “One thing I see over and over is that new business owners overestimate their revenue and revenue increase projections after the first year of business.”
Try to do everything. The tendency to have your hands in everything is what being a business owner is all about. Problems arise when business owners get overwhelmed with all of the tasks placed before them. As soon as one task is finished, two more appear. Plus, there are all of the other aspects of the business which need to be addressed – training employees, phone conversations, and answering employee questions, to name a few. Deadlines, potential business opportunities and time with family can easily become missed. You can’t do everything. It’s okay to delegate tasks to others.
Don’t seek help from advisors, experts, or trusted resources. This complements the “Trying to do everything” mistake. Many business owners think they don’t have the time or money to spend on outside help. The reality is it often costs a lot more time and money if owners don’t find someone to help them. In a study performed by The American College, six out of 10 small-business owners have not sought the help of a financial advisor. The questions and concerns an advisor will solve allow business owners to devote their valuable time and money towards growing their business, instead of fixing problems.
Mistakes are a way great way for business owners to learn, but they shouldn’t be costly. If you’re a small-business owner, or you’ve got a new business idea, MidWestOne has a team of friendly, educated advisors who can help you fulfill your ambitions. Visit your nearest MidWestOne Bank or call us at 800-247-4418.