The time has come. You’re about to launch your new business!
You’ve got the name, the logo, the killer product line, maybe even a business location.
I’m guessing you also have a decent idea of what you should do to get your business going.
What about the things you shouldn’t do?
“Enthusiasm—it can be both a blessing and a curse for new entrepreneurs. Passion for your business can fuel your success, but it can also drive you to operational and financial ruin if you don’t take the time to think decisions through.” (Forbes)
Uhhhh….
Don’t worry! We’ve got you!
Here is some well-intentioned but misguided thinking that can torpedo a business launch, put together in a nice little list of what not to do when you launch your business.
Ready?
1. A business plan is optional, right?
Uh… no.
If you don’t yet have one, do not pass go. Do not collect $200.
This isn’t nearly as sexy or exciting as putting all the other stuff together.
But, even if it’s only one page, a business plan is your roadmap. It should spell out what you hope to accomplish: sales goals and projections, strategy and tactics for how to get there, operational costs, milestones to make sure you stay on track, potential customer profiles, who you’ll need to hire…
You get the idea.
This process helps you think through all the potential challenges and see if you’ve forgotten any key pieces
It’s also something you may be asked for when you go to apply for a license or a small business loan.
Losing focus is another big pitfall of new businesses.
Your business plan is there to keep you on track — to remind you of what your core business and goals are if you start to veer off into the woods.
That said…
Don’t spend too much time on your plan.
Wait! But you just said….
Remember, you’re just at the starting gate.
As you get further into the day-to-day running of your business, you’ll discover what you’ll need to modify and adapt in your plan. Be flexible – your plan should be a living document that can account for changes in your competition, new industry trends, unexpected costs, and challenges…
And, well… reality.
2. Our stuff is so cool that if we build it, the fans will come!
Your stuff (or service) may indeed be super cool, but if you don’t get the word out there no one is going to know about it. Or buy from you.
As much as you may think you can wing it with your marketing, you need an actual plan.
Market research is a Thing. Know who your target audience is, who your competition is, and where your market is heading.
This is especially important if you are starting a mortgage brokerage. Staying on top of the local mortgage market, current interest rates and general trends can be critical to building your reputation as the go-to expert.
Is your branding appropriate to your audience?
If you are launching a franchise business, some of the branding and market material development may be already done for you, but that doesn’t mean you don’t need to learn, and lean into, your local market.
Engage with your community. Participate in events. Join your Chamber of Commerce or local small business networking groups. Partner with people who can refer potential clients to you and reciprocate by being a good source of referrals for them.
Be the local business buzz.
And don’t forget about online platforms, even if your clientele tends to respond better to more traditional marketing.
Social media can be a far-reaching and relatively inexpensive way to get the word out, especially as you are starting out. It might even allow you to tap into new and lucrative markets you hadn’t previously considered.
3. I’ll worry about finances later.
It’s not fun to go spelunking into the dark corners of your personal finances, but underestimating the costs of actually running your business is a common new entrepreneur mistake.
Know what your financial plan is before you start. Are you going to apply for a business loan? Use personal financing or credit cards? Court an angel investor or a venture capitalist?
Make sure you know the pros and cons of each option (and read contracts carefully!) so you can avoid more of those “gotcha” moments in the future.
Think twice before you ask all your friends and relatives for money.
If you need a relatively small amount it can sometimes be fine, but be aware that mingling family, friendships, and finances can often lead to hurt feelings, fighting, and falling-outs.
As much as it may sound like a good idea, you might consider being cautious about paying for things like equipment and other long-term needs with your operating cash.
Instead of ponying up the full cost immediately, consider a loan that will stretch payments out over the life of the equipment. For example, if you expect to upgrade your IT system in 5 years, look for a 5-year loan to pay for this year’s version.
You might also set up a business bank account. Mingling your personal and business finances can not only cause confusion but may ultimately lead to a visit from your friendly local IRS auditor.
Make sure you have a budget.
Overspending can waste time and resources and can be a challenge to rein in once it gets some momentum. Work to have a solid handle on your cash flow by setting up a way to track costs like payroll, office supplies, marketing, and cost of goods or materials.
However you do it, make sure you’ll have enough capital to cover your initial expenses AND sustain the business through the initial stages until you are self-supporting.
And a solid plan for how you’re going to get it.
4. More of a good thing is better!
Again… no.
Well, sometimes.
When your new business takes off, it’s hard not to get caught up in the excitement of your increasing success.
“When you start to see success, it can be easy to assume that growth will continue and the best way to make the most out of it is to simply copy and paste your working formula. However, if you … expand your business too rapidly, it could have dire consequences. You may find your period of growth was only temporary and end up stuck with a bunch of new staff but no work and no funds to cover them. That’s why it’s important to take a slow and steady approach to expansion and never act on a spur of good results.” (Mark Webster, Authority Hacker).
Focus on establishing a solid foundation first.
Take the time to determine what your demand growth will be over the longer term, then scale up gradually to meet it.
5. I have a plan, so I’m all set.
If the COVID-19 pandemic taught us nothing else, it underlined the power of the pivot.
Be flexible.
Have contingency plans in place when things like… oh… global shutdowns appear out of nowhere.
Or even less catastrophic things like economic downturns, shifts in your competition’s strategy, or the emergence of game-changing technologies (hello, AI!)
The needs of your customers are changing? Be ready to shift with them.
Revenue or cash flow problems? Be ready to shift your product lines or services.
Innovate.
If new technologies come on the market that can streamline your operations, enhance your customer experience, or make your product or services better, be ready to embrace them.
Remember, as a new and small business, your superpower is your ability to be nimble and responsive.
Use your powers for good!
6. I don’t really need to jump through all the legal hoops.
Even if you are starting a business that is less highly regulated than, say, a health care service, ignoring even some of the peskier and more minor legal requirements can be a kiss of death.
Know any local, state, and federal regulations and laws governing your industry by heart. Make sure you have all your regulatory, licensing, permit, tax, etc. ducks in a row. And make sure anyone you hire has theirs all lined up neatly too.
If you choose to purchase a franchise, take the time to really understand the structure of your agreement. Be aware of all the fees, royalties, and financial obligations you are signing up for. And make sure any financial or business-related support you are counting on is actually going to be there. Franchises can often do well because they have a more proven success roadmap, including best practices, procedures, and (sometimes) best practice legal or compliance information. If you decide to go rogue, be aware of any consequences and consider seeking legal counsel.
Choose the right business structure when registering your business.
A sole proprietorship can be the most straightforward business structure, but it can also leaves your personal assets open to any liabilities that hit your business. If someone wants to sue your business, you could end up losing your home along with it. An LLC may better protect your assets but can have additional reporting requirements and tax implications.
Do your homework.
Didn’t do a business name search on your Secretary of State’s website before you got those fancy new business cards? If you are infringing on someone else’s registered or copyrighted trade name, even unknowingly, you may find yourself facing cease and desist letters or hefty legal fees not to mention the potential costs of rebranding your business.
If you plan to expand beyond your own state sometime in the future, it’s worth checking other states’ websites too before you set that name in stone.
Have contracts and get them signed — get everything in writing.
You may think a handshake is good enough, but it may not hold up in court if things go south. No matter how strong you think a relationship is or how clear the terms are, there is always the potential that it will fall apart. And if you have different memories of what the agreement was, you may be bound for trouble.
And don’t forget about insurance!
No one thinks that things will break or a client will sue you…
Until they do.
Remember, it’s your reputation on the line when your camera breaks the day before a client’s wedding, or a deal-breaking complication comes up with a lender an hour before closing.
Protect your assets, your business, and yourself.
7. If this is what my competition is charging, that’s good enough for me.
Setting your prices based on your competitors’ prices or what “feels” right to you can set you up for a world of financial hurt.
Research your costs. They are your solid basis for pricing and may be different than your competitors due to quality, contracts, amounts… any number of factors.
Many entrepreneurs forget to figure in less-obvious costs.
Everything has to be paid for somehow — your rent if you have a storefront or office, office supplies, utilities, marketing, packaging, employee salaries…. Even things like inflation that you have no control over can affect your bottom line.
All those costs should get dumped into your product price calculations.
If you provide a service, make sure you are including not only your material costs, but the cost of your time, equipment, or any other assets you use in the process of providing that service.
Even the cost of paper and printer toner adds up – given the hefty size of your average stack of mortgage paperwork, those costs can be no joke.
The price of doing business will also shift over time, so be ready to adjust your product pricing as needed along the way.
If you find your customers aren’t willing to pay your prices, be ready to shift your marketing to a different, higher-end market. Or take on a new marketing strategy altogether.
If neither of those appeals to you, figure out where you can adjust your costs to bring your prices more in line with what people are willing to pay.
The flip side of this is… don’t undervalue yourself!
Your ideas and products have worth. Don’t feel that you have to give things away just to gain market share or visibility. Don’t set the expectation that you are the go-to for cheap or free products or services.
“Good exposure” doesn’t pay the bills.
If your product is good, have the confidence to price it at what it’s worth!
8. The customer isn’t always right. But they CAN always leave reviews.
This may be true, but bad customer service has become so prevalent that people are often legitimately shocked when they encounter good customer service.
It’s like they’ve just seen a unicorn.
Take time to understand your customers’ needs and goals.
Listen to feedback. Use their insights to improve your products and services.
Treat them with respect and communicate honestly and transparently. There is still plenty of value in the old adage “Treat others the way you want to be treated.”
Professional and ethical behavior can build trust in your brand and your business, and can leads to repeat customers and referrals.
Even negative feedback can turn into a positive thing if you deal with it promptly and ethically. Resolving complaints can reinforce your commitment to customer happiness.
Especially if you are in a relationship-based industry, like mortgage brokering, good customer service is key. Really listen to each client’s needs and tailor your solutions to what best solves their problems. They won’t forget it.
Be the unicorn.
9. I don’t have time for paperwork.
Find the time. Or hire someone who will take care of it for you.
Up-to-date data and accurate books will give you the ability to make informed business decisions. And it can allow you to head off minor problems before they become major catastrophes.
Staying on top of your bookkeeping also makes sure you don’t lose track of payments like taxes, fees, or insurance bills. Late fines for forgotten bills are no joke.
And the last thing you want is angry and frustrated employees who can’t pay their bills because you missed payroll.
You’ll need to know what your expenses are, how they’re changing, and how much revenue you need to balance it out. Regularly review your budget and adjust it as needed.
Without accurate and timely data in some sort of format you can use to look at these metrics, you are running your business blind.
“We all think working on paperwork, budgeting and keeping up to date with insurance is miscellaneous work, but it’s important and necessary,” (Gerly Adrien, co-owner of Tipping Cow)
Do you really want to spend all of January doing nothing but the accounting data entry you’ve been avoiding all year because you suddenly need to turn it over to your tax wrangler?
I didn’t think so.
10. I’ll sleep when I’m dead.
You know your business best, and it can be really hard to trust someone (or multiple someones) to handle critical tasks for you.
However, trying to handle it all yourself is a recipe for slow business growth, mistakes, and burnout.
If you sacrifice your health and well-being to your business, who is going to be there to pick up the pieces when you finally collapse or implode from the stress? Remember that you are in this for the long-haul.
It’s a marathon, not a sprint.
As hard as it is to let go, knowing when to get some help can be key to the growth of your business. It could mean hiring the right team, working with advisors, or finding a business coach.
It can also be the key to salvaging your sanity and getting your life back.
And, for heavens sake, pay yourself something. Anything.
“Entrepreneurs have a tendency to put all of their available funding and liquidity back into their businesses, sometimes without thought for their own personal finances. But paying yourself a salary — even if it’s a small wage, even if you’re bootstrapping — will be crucial to your longevity and your future success.” (” target=”_blank” rel=”noopener”>Bentley University)
Opening a new business can be a roller coaster ride of excitement, learning curves, sleepless nights and fist-pumping successes.
No one can anticipate every pothole and bump in the entrepreneurial road, but hopefully with these tips you can stack the deck in favor of your success.
We can’t wait to watch you fly!
Published on March 8, 2024
