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Avoiding the Most Common Errors of New Small Business Owners

The most common errors made by people when they are just starting out revolve around three central themes: preparation/research, time/money and customer relations.

Common Errors In Preparation/Research:

A. Going into business for the wrong reason(s): So many people go into business for themselves based on misconceptions and myths. Before you go into business for yourself you should look into the top myths of home businesses to try and avoid the common traps.

B. Not knowing enough about the business that they are going into: it is important to know about the business you are attempting to start. You should know: what qualifications/legal considerations could affect you, is there a market for your business, who is your competition, how much money can you expect to make from this business, how much money do you need to start the business, etc…

Common Errors In Time/Money:

C. Spending too money: The inclination for some new business owners is to throw money at a new business – to buy all the toys and tools they can get their hands on. This can quickly lead to a cash crunch, which in turn can lead to the failure of your business. There are many great products and services out there to help you with your small business – but it is important to manage your spending – especially during the start-up phase.

D. Spending too little money: Like many things in life – opening a business often requires some investment. The person who sets up a company and then never spends the money to promote and market it – will probably fail. The hard part is figuring out what things are important to start and grow your business and when you have reached the stage in your business when you should be spending money on the important things.

E. Bad cash budgeting: Without proper cash budgeting many small businesses not only fail but lead to personal cash flow problems and bankruptcy for the owners. Before starting a business you should perform a cash budget, which you should update periodically.

F. Errors in setting your product prices and consulting rates: If you set your rates/prices too low then you will not be able to afford to stay in business. If you set your rates/prices too high then you will not be able to get any business. Therefore it is important to do your research and set your rates and prices accordingly.

G. Not optimizing your business processes through continuous improvement: Nobody starts out in business doing things perfectly – the best way to be successful is to make sure that you not only devote time to working on your products or services but also invest the time to improve your business processes – whether it is finding a better way to find clients or a cheaper way to deliver your products or services – it is so important to always be looking for ways to do things better.

H. Working too much and burning out: Many new business owners think that you need to work around the clock in order to make your business work. The smart business owner knows that ideally your business should be making you money 24-hours a day BUT you should not have to work 24-hours a day to accomplish this.

I. Not investing enough time in your business: generally starting a business requires a lot of time and effort. Neglecting to give your new business the time it requires to build it into a legitimate business and maintain it – will quickly lead your business to enter a downward spiral.

Common Errors In Customer Relations:

J. Saying ‘yes’ to every client: some clients are just not worth the trouble, some jobs are not worth the time and some contracts are not worth the cost of the paper that they are written on. It is important to properly vet your customers before entering into a relationship with them. One bad debt or shady client could lead to the downfall of everything you’ve worked for.

K. Turning down too many jobs: While it is inadvisable to take every client and contract that comes your way – you need to balance this caution and selectiveness with a healthy understanding of which clients and contracts you need to take in order to stay afloat and grow your business. For me this has led me to develop two separate lists – the list of things I want from clients/contracts and the things I need from clients/contracts. This means that I will work for clients/accept contracts that do not have all the things I want (for example maybe it involves working long hours temporarily or traveling extensively) but I don’t take contracts that do not give me everything I need (for example if I have doubts about the integrity of the client then I will NOT take the job).

L. Trying too hard to look like a big business: This is an error on two fronts. For one thing many people go into business for themselves in order to escape the confines of the corporate world – working too hard to show yourself as a professional can put you right back where you started. The second way that this can hurt you is that it takes away the ability for you to connect with your clients honestly and openly. If you are projecting this persona then you never connect to your clients on a personal level – even worse when they find out that you are a “one-man show” they can feel misled and deceived.

M. Appearing too unprofessional: The flip side of the last point is that you cannot behave too unprofessionally. Most clients want to know you as a person but some topics should always be out of bounds. Further it is important to show your clients that you take your job seriously – things like having business cards, answering your phones professionally and delivering things on time and on budget are very important.

N. Not creating a business that adds values to your customers: if your services or products do not make your clients’ life better then they will not pay for it. Your business must be focused on adding value to your clients’ personal or professional affairs.

O. Bad customer services and after sales support: many small business owners complete a job and never look back – but great customer service and after sales support means return customers and great word-of-mouth – these are the most valuable forms of advertising out there. A flyer delivered to 1,000 may deliver a few clients who are curious about your business but someone who has dealt with you before or had you recommended to them is “pre-sold” – they already trust you and want to work with you.

The final issue to consider and one of the most common errors made by small business owners effects all three of the categories listed above.

P. Not doing things your way: people frequently get into business in order to “do things their way” and make their own decisions but quickly drop this attitude when confronted with the challenges of working for themselves. It is important to stay true to your own vision, your objectivism your values and follow your “gut” and intuition. This may be hard in the interim but it is critical to establishing a business that works for you.

First Essential Steps to Insure Money For Starting a Business on a Budget

Starting a business takes a realistic assessment of expenses, planning assets, and most importantly, funding requirements. The second leading cause of small business failure is from under capitalization. (The leading cause is mismanaged growth). Capitalizing your new business means overcoming the high up front startup costs, and making sure that you have enough money in reserve to handle operating expenses for a few months while building your client base or bringing your service or product to the market. Nothing is as disheartening as seeing that your business has failed when it could have succeeded with a bit more money at the right time.

To figure out your capitalization requirements, you’re going to need to itemize your start-up costs, like paying for office and work space, warehouse space if you need it, and initial capital investments in equipment, tools and furnishings, plus service fees (attorney time, licensing fees and state permits). You’ll also need to start the basic utilities – internet, telephone, trash pickup, electricity and water. When you start adding it all up, it can become more than a little daunting.

However, you don’t need to do it all at once. Make a priority list. Can you work out of a spare room in your home, or use your garage as your small warehouse? If the type of business lets you do this, then you can postpone a large chunk of continuing overhead expenses by doing exactly that. If you’re providing an online service business (marketing assistance, freelance writing, and the like), you may never need to get “real” office space, though there are some serious benefits to doing so. (Not being interrupted by your family during business hours is the least of them!)

Another way to overcome a shortage of capital is sweat equity. When you’re starting a business, the most plentiful commodity you have is your back and sweat, and doing things for yourself. It’s easy to get into a rut with this, so be sure that you’re valuing your time appropriately – remember that the leading cause of business failure is mismanaged growth: Getting into the habit of doing everything yourself, when hiring an employee to free you up to do business management is one of the classic failure patterns. Doing things yourself will give you a gut appreciation of where the money goes, and what jobs you’ll want to delegate in the future. It’ll also give you a leg up, when you have employees, to know what all the jobs are, and how to train people to do them to your satisfaction.

Keep an open mind during the business planning phase. Network and talk to other small business owners, and make a habit of going to your local SBDC luncheons every month. Learn from the people who are going through what you went through, or have gone through it before. There will be lots of suggestions on how to manage your business’ growth.

Finally, be aware of the differences between capital expenditures, sunk costs and recurrent expenses. Or, when it’s time to spend money, don’t be afraid to do it when the opportunity strikes!

Moms Interested in Running a Business From Home – How About Pet Sitting?

Many people are interested in running a business from home, and the numbers of moms that are setting up and enjoying a successful home business are increasing daily. Are you a mom that is interested in running a business from home?

Ideas for Running a Business from Home – The First Hurdle

Finding a suitable idea for running a business from home is the first hurdle you have to overcome when starting your own business from home. In fact, a lack of ideas is one of the major issues that holds a person back from running a business from home.

However, in actual fact, the areas for moms interested in running a business from home are vast. Just take a look around and you will see an abundance of different businesses that are now being carried out successfully from home. To name just a few business opportunities for running a business from home would include home-based coffee stalls; bed and breakfast services; secretarial services; hairdressers and barber services and tuition grinds. All of these business undertakings are great ideas for running a business from home, and all of which can be run with minimum capital and comfortably operated from home.

Another great idea for running a business from home is to become a Pet Sitter.

How About Staring Your Own Pet Sitting Business?

That’s right – why not start your own Pet Sitting business, and if you happen to be an animal lover, all the better, as you will then get paid to care for pets which you love anyway, just one of the reasons why a Pet Sitting business is one of the great ideas for moms interested in running a business from home.

In fact it could be argued that there are few careers that offer so many benefits because if the Pet Sitting business is for you, there is little doubt that it will be fun, interesting and rewarding. Not only is a Pet Sitting business a service that is needed and appreciated, it actually requires little extra space if any, and very little start up costs but it has great earning potential. You could be up and running a business from home in no time.

With Pet Sitting, not only will you be running a business from home and enjoying the freedom of being your own boss, setting your own hours around your family life and other life commitments etc., you can also chose to work your own hours, part time or full time. Anyone who has ever watched animals do the funniest things or such like, will know that no two days will ever be the same!

What Is A Pet Sitting Business All About?

A Pet Sitter is an individual who is hired to care for pets while their owners are away from home for any reason, for example on holiday, travelling for work, away for the weekend, sick etc. As a Pet Sitter you can care for other people’s animals and pets in the pets own homes, which people like, because it give the pet owners total convenience as well as peace of mind, knowing that their pets and homes are being cared for while they are away. The pet is happy too because it gets to stay at home, instead of a stressful trip to a boarding facility or kennel. As a pet sitter you can choose to work with all types of pets or you can specialize in particular types of animals (e.g. just dogs, cats, fish or horses, etc.), also what types of pet care services you want to offer to your clients. For example, as well as standard Pet Sitting business services (feeding, walking, playing, caring for), your Pet Sitting business might offer overnight Pet Sitting, companionship by the hour, or house sitting.

Starting your own Pet Sitting business requires no special education or experience to break into this career and succeed, which is just another reason why starting a Pet Sitting Business is a great idea for a running a business from home.

Juliette Stewart

Founder of HomeBasedMums.com