Starting your own Business – What NOT to do!!

Posted on: 18 March 2016

Lots of people, for whatever reason, find themselves in the position of starting up their own business. This may be through being made redundant, or through joining the workforce for the first time, or for other reasons. Here are some common pitfalls that, if avoided in the start-up phase, should help you on the road to success.

No Business Plan: This is simply silly! Would you run the marathon without a training plan? Then why would you expect to be able to run a business without first mapping out your steps to building your profits. Another upside of creating a business plan is that it will focus you on the issues you need to address, and help you to ascertain the level of funding you may require.

Raising too little capital: Many start-up companies assume that all they need is enough to rent a space, buy a computer or other equipment or stock, pay for a bit of advertising and everything will fall into place. Not so! You need to consider all the overheads, such as light and heat, insurance, the costs of financing such as overdraft or term loans, and a salary for yourself until such time as the company is up and running and making enough profits to cover all this itself.

Raising too much capital: Not quite so common as the previous one, but it happens all the same. The danger is that the money is quickly spent on too many salaries, and general wastage such as over marketing, while the core product has not been developed enough to sell profitably.

Targeting too small a market: We are often told that if we can find a niche product or service, we will corner the pot of gold because nobody has yet thought of it. But stop to think for a minute – maybe somebody has already thought of it, but has decided that the market in which it is saleable is too small to make the project viable. For example, if you create or develop a niche product, that can only be used by companies with over 2,000 employees and only in Ireland, or only by families with six children or more, you will soon find that your market has dried up pretty quickly as you are limiting yourself to a small group of potential clients. So always think the product or service right through to the end market.

Asking too many people for advice: It is always good to seek people’s opinion, but too much advice can be confusing and debilitating, so choose who you listen to wisely. It’s always a good idea to pick out a couple of key advisors, you may need to pay them, but it can be money very well spent if it guides your company into profitability faster.

The above list is not exhaustive, but if used, should certainly give you a better chance of thriving and surviving in the longer term.

 

Eilis Quinlan

Quinlan & Co,. Frederick House, New Row, Naas, Co. Kildare