Every business is a form of gamble you take on the market. Are you going to be successful? It is an impossible question to answer. More often than not, entrepreneurs can predict with some level of certainty the future path of events. However, the market can be full of surprises. A new and unexpected competitor could outshine your company. A sudden crisis can also drain your finances (we’re looking at you, Covid-19). In other words, even with the best will in the world, business owners can face challenges they couldn’t prepare for.
Yet, in the majority of cases, a business loses money on events that could have easily been avoided. Preventable events can be just as damaging as unexpected crises. Why don’t companies avoid preventable issues? The answer is simple:
- Because they were trying to save costs
- Because it seemed too much hassle
- Because they didn’t do their research
- Because they didn’t grasp its importance
Skipping business cover
When you launch your first company, you will need to think carefully about the right insurance cover. New entrepreneurs can find it stressful to navigate the troubled waters of insurance. You can learn more about the role of general liability insurance before the launch. As a rule of thumb, liability cover is non-negotiable even if you think it’s too expensive. It’s going to prevent unwanted costs when you receive an expensive medical bill from someone who got injured on site. You will also need to consider insurance cover for your building and its contents, whether you own or rent the premises. Your lease contract can state whether the tenant or the landlord is responsible for building insurance. However, when it comes to content protection, it’s not something you can afford to skip. The last thing you want is to have to take a loan to replace stolen or damaged items.
I’ll create a business plan later
What does a business plan do? Solo entrepreneurs tend to describe a business plan as a strategy for the future. While the description is partially accurate, the business plan also provides a direction and actionable steps to reach your objectives. When you start a small business, you may be tempted to postpone the creation of a business plan until you get a better sense of the market. However, investors and money-lenders pay close attention to your growth strategy. Your growth strategy can attract investments. Similarly, the absence of a strategy can make it hard to unlock funds and generate growth.
First impression only for recruitment
You’re a people’s person. You believe in your personal judgment to find future employees. The strategy can be effective as you want to build long-lasting relationships with your team. As such, it can be helpful to ask yourself how you feel or think about job applicants. However, you can’t hire someone entirely based on your feelings. Getting recruitment wrong can be expensive. Indeed, the true cost of a bad hire can range from 50% to 150% of the annual salary. In other words, you want to make sure you test and check future employees for their skills and credentials. Background checks do come at a cost, but they can save you a lot of money in the long term.
DIY marketing with no strategy
You don’t need to be a marketing expert to start promoting your business. Many tools are fully accessible to beginners, such as Google AdWords. Google AdWords is one of the preferred marketing tools for new entrepreneurs, as it enables them to set up a marketing budget to promote their brand. Additionally, the tool offers troubleshooting tips and tricks. However, don’t assume that you’re not wasting money just because you’ve explicitly capped your budget. Indeed, countless businesses are spending money on ineffective strategies. Some of the most common money wasters on Google AdWords include ineffective account structure, bidding on a competitor’s brand, poor ad copy, and faulty conversion tracking.
I know better
You’re the business owner. Does it mean that you are absolutely omniscient? Perhaps not. Many entrepreneurs reject criticism or different opinions from staff or partners on the basis that the founder knows the business best. In reality, you could save yourself a lot of hassle by listening to their views of the company. Your employees, for instance, could help you improve workflow or customer relationships. Business partners can help address brand reputation and investment strategies. Failure to listen to a different opinion could make you more vulnerable to failures in the long term. Firstly, employees could feel undervalued and taken for granted if you don’t acknowledge their complaints. They are unlikely to stay with you. Partners can also walk out of the partnership for the same reasons.
Every year, ambitious businesses go bankrupt as a result of preventable losses. Protecting your business against those preventable incidents can give you the funds you need to survive unexpected crises.