In business, mistakes can cost you money, customers, and even the reputation of your brand. However, these mistakes can easily be avoided with the right preparation and prevention.
We have outlined Seven common mistakes you should avoid as an entrepreneur or business owner.
1. Starting a business without an entity
Securing a business name registration is required to operate a business, but this process is different from incorporating a company. Unless you register for limited liability company, you and your co-founders can be held liable for anything bad that happens with relation to the business.
Imagine that Tom and Jerry, two longtime friends, have been speaking about their love of cheese. To secure the right type of cheese and due to scheduling conflicts, Tom and Jerry decide to start buying cheese from the farmers and distributing it to grocery stores.
That means that if someone gets food poisoning from the cheese Tom and Jerry sell, that sick person could sue for damages and come after Tom and Jerry’s personal assets, which they might think have nothing to do with their business.
2. Delegating too late
Your role as the leader and/or founder of your company is to inspire your team with innovation, and planning. In the early stages of your business, you wear many hats, and perform many roles. As the business grows, you need people to manage different areas and specialists who’ll add their expertise to your management team. Bring on team members with skills that are different than yours and give them the tools they require to execute. The ability to successfully manage is different from the ability to lead. Delegate the management role to someone who has proven experience so you can focus on exploring new opportunities.
3. Doing it all yourself
Having an accountant, banker and attorney with whom you’re on a first-name basis ensures you will build a strong foundation for your business and won’t make mistakes that will cost you more to fix down the line.
4. Not learning from failures
Failures in a growing startup are par for the course, no matter the business. Every failure is an opportunity to learn and grow, and when things veer off-track, be nimble and open to pivoting if necessary. When you remove fear of failure, teams are free to move forward, innovate, experiment, and flex their creative muscle. Minimize people’s natural aversion to risk and instill a culture of continuous learning in which the lessons learned are used to improve the business.
5. Not protecting your Intellectual Property
You’ve worked hard to build out your business so it’s crucial you protect intangible assets like your name, logo and, if you’re a designer or inventor, your creation. Everyone starts small, but protecting your intellectual property is important when planning long-term. The theft of intellectual property is a rampant problem, and patent, trademark, industrial design and copyright protection are your best bet against what could amount to a significant financial loss. Protect your Intellectual Property early and fast.
6. Not putting everything in writing
A handshake deal might not be enough if you have a disagreement with a vendor, partner, employee, or customer. A well-defined, signed contract by all parties, on the other hand, will save you from an enormous headache and expense if problems do arise. It might be tempting to pick speed over diligence when you’re busy growing your business, but make sure to get everything in writing and think of it as insurance. You hope you won’t need to use it but it’s there if you need it.
7. Ignoring preventative care
Don’t wait until a problem arises before seeking professional help. Consulting with legal and tax professionals early on in your business’s lifecycle can help you build a solid foundation and establish relationships with experts who’ll learn the intricacies of your company. They’ll guide you through reviewing contracts, establishing the best tax structure, and hiring employees so you can concentrate on the reason you got into business in the first place: growing a successful company.