Self-employment can be financially risky and there are many possible pitfalls when starting your own business. Many businesses fail early on because simple mistakes have been made; it is a good idea to become familiar with some of the problems that can happen in order to avoid them. It is estimated that as many as one fifth of all new businesses will fail within a year of start-up but there are a number of steps which can be taken in order to maximize the potential success of a new business.
The common mistakes
There are many businesses launched with very little or very poor market research having been carried out. Finding out about the services and products that are in demand is very important. A new business owner may be very passionate about the service that they offer, but if customers do not need it then the business is destined to fail. It may be that the product or service can be tweaked in order to meet the demand, but it is better to know in advance.
It is also a common fault that there has not been enough attention paid to the competition. Other companies may offer similar products and services and new businesses need to show the customers why they should be using their product instead. Lack of awareness of the marketplace is a common mistake and it shows that the business owner has no knowledge of the market outside his or her own business.
Poor administration is also a common mistake. Invoicing of clients and customers should be completed promptly. Not sending out invoices on time can lead to financial problems later on and this is not good for a new business. Other administrative tasks that can fall by the wayside include the stock control function. The business needs to be aware at all times of exactly what can be supplied when. This is easily achieved using computer software these days but should be kept up to date at all times.
Avoid the mistakes
Thorough research is essential before starting a new business. This is a task that can be carried out in-house or by an external company and should be done before the business is opened so that the correct planning can be put into place for the future. Getting the right staff in place is also important. Companies that are to have direct contact with the customers will need good customer service staff to represent them. Experienced warehouse and stock operatives should be employed for efficiency of supply and stock control.
When starting a new business, administrative assistance is available in the form of an umbrella company. This is an invaluable service that can be used to deal with issues such as invoicing, taxation and payroll if staff are involved. The self-employed person is able to concentrate on the work that is required and the necessary marketing, without the worry of dealing with the official side of the business. Self-assessment is not necessary as tax and national insurance can be administered on a PAYE basis by the umbrella company.
Sarah White is a freelance writer and loves writing on finance and business related topics. She is planning to start her own business and is currently exploring the world of startups.