So there you are, bright-eyed and busy-tailed with a copy of your business plan in your hot little hands. You’ve got your funding in place, your market research looks good, you are destined for success. Everything could go right, provided you avoid the following pitfalls.
All Fur Coat and No Knickers
Launching a big glitzy marketing campaign can certainly get your brand name noticed, but you also need to be able to back up the hype with solid performance. There is little point advertising in the national press if you’re not in a position to take on new clients, just as you will look the fool if you claim to operate cutting edge media solutions but don’t even have a basic website up and running. Make sure the image your project for your new business can actually be realised.
Rapid Growth… of Staff Costs
Now, I’m not saying that you shouldn’t hire anyone at all, but bear in mind that after one-off costs, employees will be one of the biggest overheads your company has to contend with. Rather than having them as a regular expenditure when you’re starting out, keep your workforce for a minimum until your business has found its feet. You can always recruit later on. It makes more sense to grow your company with revenues instead of lumbering yourself with costs that you will have to meet from current funds.
Preening Over Premises
I get it: you’re in charge of a shiny new exciting company, and you want shiny new exciting things to reflect this. But don’t go overboard. Unless they are an essential part of your business plan (for a restaurant or bar, say), spend as little on premises as you can decently get away with, and ensure your lease is as flexible as possible. It’s no good having the entire top floor of the latest trendy chrome-and-glass skyscraper if all you need is a desk and a chair. Tailor your office to what you need, rather than the dream of your ideal workplace. If any location is really that alluring, compromise: see if any businesses in your building of choice would be willing to sublet you deskspace on an ad hoc basis. True, it’s not as good as having your name on a plaque in the lobby, but it will be significantly cheaper.
If you’re attracting new customers by offering higher quality but lower prices than your competitors, you need to be able to deliver. Don’t come back to them later on asking for a deadline extension or blaming a price hike on your suppliers. These are things that you should have considered before you took on the work. It’s very tempting to talk up your new enterprise and to offer the earth in order to gain new custom, but it will come to naught if you flounder and your disappointed clientele start bad-mouthing you. By all means, market yourself aggressively and offer incentives to prospective customers; just don’t bit off more than you can chew.
Your launch night was amazing: you gave a brilliant presentation, all your invited guests turned up, and tequila girls made sure that they never ran out of drinks. Several people followed up once their hangovers had cleared, and you got a couple of contracts out of them. Now, a few months later, the early buss has died down, the first projects are coming to a close and you’re wondering when your bright new enterprise became so lacklustre and boring. Well, when did you stop marketing? While it is gratifying to see your early efforts pay off, that is no excuse to rest on your laurels. You should have a budgeted for consistent marketing spend in your business plan. It is very rare for new business to come to you out of the blue – to get the billing hours and cheques coming in, you have to hustle for them. Marketing is always important; ignore it at your peril.
This is just a quick list off the top of my head, culled from my own and other people’s experiences. I’m sure that I have missed out other glaring errors that entrepreneurs make when starting out, so if you can think of any, feel free to add to the list in the comments.
[Image by JGodsey]