If you’re starting a new business (and especially if it’s your first), you’re going to make a lot of mistakes.
That may sound harsh, but it’s the truth. And believe me, I’ve made lots of them myself.
Unfortunately, many people make more than their fair share of mistakes because they never learned how to run a business. They just decided to turn their passion or skill into a business and went for it—despite the abundance of help available for entrepreneurs these days.
I don’t know why you’re starting your business. But what I do know is I don’t want you to make the same mistakes I made. So here are seven things you should pay attention to when starting a business to avoid problems in the future.
1. Make sure you get legal advice
Whenever people thinking about starting a business come to me for advice, here’s something I always tell them: “Get a lawyer”.
I understand that money can be tight when you’re just starting out, which is probably why most people respond with, “Really? I was just going to file for an ABN and go for it”. But I can’t stress enough how important it is to engage a good small business lawyer right from the beginning.
A good lawyer can:
- help you set up the right type of business structure
- set up employee agreements
- make many other suggestions for minimising your legal exposure.
Hiring a lawyer may seem like an unnecessary expense, especially when you’re a brand new business. But believe me, it's worth every penny.
2. Have an employee training program in place
Unless you plan on keeping your business a one-person show, sooner or later you’ll be hiring employees. And to do that, you need to have some sort of training program in place.
Yes, it’s going to take time and money to set one up. But if you’re just starting your business you can’t expect new employees to instinctively know what you want them to do and how you want them to do it. (They’re not plug-and-play devices.)
Create the necessary training program now, and you’ll save time and money in the long run. But if you don’t, be prepared for a harsh reality check and some big-time failures.
3. Make sure you hire the right employees
I totally underestimated how difficult it would be to hire the right people for my business. I thought, “People want to work hard, right? How hard can it be?”
But after some massive failures I learned that finding, attracting, and retaining top employees is one of the hardest tasks any business owner will face. The strength of your company depends largely on the strength of your team. And when you’re just starting your new business you need all the breaks you can get. So make sure you build a strong by choosing the right employees.
And I’m not just talking about skills here, because you also need to…
4. Create the right culture for your business
Making your employees aware of the goals you have for your new business is pretty easy. You just create an official Mission Statement, and then let everyone know about it.
But creating the right business culture and conveying that to your employees is a lot more difficult. You can’t really dictate it. Instead, you need employees who ‘fit’ that culture, and can influence it to make it even stronger.
Unfortunately, while it’s easy to see what skills a person has, knowing whether they’ll fit the business’ culture can be a bit hit and miss. You may even have to let people go because they’re having a negative effect on the culture of your business.
But make no mistake: When you’re starting a new business, hiring a team of people who fit your business’ culture can be the difference between success and failure.
5. Sales and marketing are the lifeblood of your business
You may well have an amazing product or service, and a fantastic team to help you deliver it. But if none of your customers know about it, and none of your employees can sell it, you may as well have not even bothered.
A lot of business owners underestimate the importance of marketing and sales. But the truth is, without it you have no customers and no revenue. And without those you effectively have no business.
So remember there’s more to business than just having a great product or service. You need to get the word out to potential customers, and then turn them into paying customers. Which is why sales and marketing form the lifeblood of any business.
6. Develop the necessary systems and processes
Despite the advances in medical technology, the ability to clone yourself is still a long way away. So if you want to grow your business, you’ll need to share the workload with other people. And that means creating repeatable systems and processes that anyone can follow.
Not only will they help you expand your business, they will also give you a way to exit the business while still reaping the rewards. But without those systems and processes in place you effectively are the business. And if you leave, the company will no longer be able to operate.
7. Learn how to manage your cash flow
As your company grows, cash flow management is going to become more and more important. Remember, if you can’t pay the bills as they fall due your business can go bankrupt—no matter how much of a profit it’s making.
Growing a business takes both time and money, so you need to learn how to manage both of them. I highly recommend having an up-to-date cash flow forecast that extends at least three or four months into the future so you always know what’s coming up.
Because if you can't afford to pay your vendors and employees, they won’t be sticking around for long. And then where will your business be?
As I said, chances are you’re going to make a lot of mistakes when you start your new business. But by paying attention to these seven important aspects, you should be able to avoid some of the more serious ones.
If you have any questions, or would like to help with your new business venture, don’t hesitate to get in touch with us. And if we can’t help you ourselves, we’ll put you in touch with someone who can.