Major mistakes small business owners make in their first year

Image by Gerd Altmann from Pixabay

By Henry Brown

If you want to start a business, then you will know what an exciting concept this can be. That being said, you may also have a lot of worries and concerns. If this sounds like you, then there are things that you can do to try and avoid them if you take the time to read this guide.

Agreeing to pay too much rent

A lot of small business owners end up either taking out more space than they need or paying for a space for longer than they need. If you make the first mistake, then you may end up paying more than you have to because you have hopes that you’ll expand quickly. Although there is nothing wrong with this, remember that expansion takes a great deal of time and it’s not something that happens overnight.

For this reason, you need to just pay for the space you need right now, on a short-term lease. You can always move if you do want to expand, and over time, you may realize that the space you thought you needed, isn’t what you need at all.

The second mistake, as mentioned above, means that you’ll be stuck in the property for years after your company has outgrown it. Some companies make the major error of making both mistakes at the same time.

Unfortunately, there is a lot of temptation out there for small business owners. They are often bribed with things such as a reduced rate of rent or even free rent for the first couple of months. If you want to avoid this, then you need to try and find a space that has a little more room than what you need. You also need to negotiate so you can get the space for a short period of time while asking for the benefits that come with a long-term lease.

Buying big

When you first begin your operation, it is natural for you to want to get the best possible stuff for your business. You may want to have a fancy new laptop and you may also want to have a posh office for your team members too. If you adopt this approach however, then you may find that you end up running your small business into the ground before you have even started. It may even give you a false sense of success in the early days and as time goes on, the debt will start to catch up with you.

If you want to work around this, then you need to try and focus on the expenses that you need to run your daily operation. Spare no cost, or very little cost when it comes to your industry essentials. This could include your point-of-sale system, for example. You then need to set the others as rewards if you have had a great year or quarter. Some of the expenses you need to watch out for include team-building activities, fancy launch parties or tech that you only want as it helps you to show off. It’s important to remember that for every company that opens, another one shuts, so it is better to be more cautious where possible.

You also need to avoid buying too much product too. The best way to do this would be for you to work with a reputable and reliable vendor. Depending on your industry, you should know that there are many cannabis supply chain companies out there who can help you with things like this.

Raising money fast

If you decide to go down the route of venture capital, then you should know that sometimes getting too much funding could be a problem for you. You may be tempted to try and splash out, but sooner or later you may find that you end up being cash-poor later down the line. You have to remember that every single investor is a person who has an opinion about how you should run your business. If you have too many investors, then you may find that this is like having too many chefs. You may find that things end up spoiling far too quickly.

In your first year of business, you may find that you end up finding new opportunities that you just never thought were possible. Raising money and spending early gives you absolutely no room to make these kinds of adjustments. Finally, you may find that your business ends up being successful enough and that you do not have any need for venture capital at all.

Just be clear from the get-go how much of your money is going to go towards your salary because you should not expect to see much of a profit in the earlier days. If you end up banking on making a serious profit in the first few years then this can stunt your business growth, as the chances of this happening aren’t likely, and you may find that you have far more expenses than you realize in the early days too.

Personal funds

If you mix your business funds and your personal funds, then this will make it incredibly difficult for you to know how you are doing. If you have money flowing through your business account and your personal account, then you may find that you simply do not have any clue as to which funds you can use for expansion and which funds you can use for your personal use.

Another reason why you should not mix your funds is because it can confuse things when it comes to tax. This is the last thing that you need, so it is vital that you try and take the time to sort issues like this as far in advance as possible.

Of course, if you try and follow the above steps then you will soon find that it is easier than ever for you to start making a positive change for your business. You can also avoid some of the many mistakes that business owners make when taking the plunge for the first time.


Henry Brown is an online marketing executive. When he isn’t talking shop, he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.

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