Planning on entering the world of entrepreneurship in the near future? If so, you’ll be in excellent company. Recent data shows that over 500,000 new businesses are created each month. In the U.S., tens of millions of individuals can currently call themselves business owners. Whether they run a brick-and-mortar or an online boutique, new individuals become entrepreneurs each and every day.
If you’re ready to become a small business owner yourself, there is a steep learning curve ahead. However, certain lessons are more important to learn than others. Here are six common (and preventable) mistakes that many new entrepreneurs make.
Not selecting the correct business entity
Choosing the right business entity/structure is more important than you may believe. Oftentimes, new entrepreneurs will simply stick with a sole proprietorship filing. Although this selection can occasionally be an appropriate choice, it can cost you big time in the long run.
Instead consider registering your business as an LLC, which has a number of exceptional advantages. Among these benefits are tax breaks and reduced paperwork. One of the biggest benefits is the protection an LLC provides your personal finances. In the event of a lawsuit or uncollected business debt, entrepreneurs with LLCs cannot have their personal assets taken from them. Prior to forming an LLC, be sure to review all state-specific rules and regulations.
Doing business “under the table”
A shocking number of business owners conduct business illegally. Home-based business owners — and those with physical locations — will sometimes fail to file the proper paperwork for inspections, a sales tax permit, and a business license.
Even if you plan to run a business as a hobby, do not conduct your transactions “under the table.” While some justify this practice by citing that others do this, make sure that you are doing everything 100% legally. Selling products without proper licensing or inspections can lead to massive fines and jail time.
Not spending enough time on branding
Creating brand awareness among potential customers is critical to separating yourself from the competition. Your website, social media pages, business name, and logo are all essential to attracting and retaining customers.
While some tasks such as web design are best handled by qualified professionals, you can discover unique business names by using a business name generator. You can also use a logo creator online to design an attractive logo. Once you’ve downloaded and customized your logo, you can add it to merchandise, marketing materials, business cards, and much more.
Forgetting to plan for emergency expenses
Just as with your personal life, emergency expenses can (and often do) arise when running a new business. Unexpected fees and broken equipment are only some of the many expenses that can arise without warning.
Avoid having to take out loans or business credit cards by setting aside a separate emergency fund. Plan to save between $1,000-$1,500, as this amount can cover some of the most common expenses. From repairs to anything else that may come up, you can avoid significant financial setbacks.
Working too many hours
Many new entrepreneurs treat their bodies and minds like machines. With so many tasks and expectations, it is common for business owners to work 60, 70, or even more than 80 hours per week. Although this may be necessary at select times, overworking yourself should never become a habit. Just because you own a business does not mean that you’ve developed superhuman abilities. Rest and leisure are as important as they were before launching your new venture.
Prevent burnout by scheduling regular time off and self-care each week. You can create a monthly planner to stay on track with your tasks and schedule downtime as well. There are customizable monthly planner templates that allow you to add your own graphics, sticky notes, and videos.
Spreading yourself too thin
Last but not least, new business owners have a reputation for spreading themselves too thin. On top of working too many hours, they often release a vast product/service list that isn’t defined. If this sounds like you, narrow down your offerings so that you’re selling what you do best. Expand only when you’ve mastered the basics of business ownership.
Avoiding these six common mistakes is key to running a successful business. Beyond this list, treat every other mistake as a learning experience. Rather than getting upset at yourself, learn from every bump along the way.
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