Startups are exciting. Building something bigger than yourself is a rewarding feat in itself. Almost everyone dreams of leaving a mark in this world. And making an impact in people’s lives through entrepreneurial ingenuity is something that most people daydream about. But just like most thrilling things, starting a business also has its risks.
The data provided by the Bureau of Labor Statistics show a 20% failure rate within the first year of small business establishment. And whether this failure would lead to entrepreneurs going bankrupt or just having a financial hiccup that they can withstand, prevention will always be better than cure. And the best aid in prevention is information.
Here’s what you need to ensure the continuous growth of your enterprise.
1. Mixing your personal finances with your business funds.
Taking money out of your business funds for personal gain and funding your business with money supposedly for your personal expenses are both possible causes for your startup’s downfall.
Once it becomes a habit, it would be hard to unlearn. And this affects both the present and the future states of your business. Investors will see your actions as a lack of financial discipline. Your taxes would be complicated and would most probably cause you financial losses. It will highly likely be the cause of growing personal debts and business loans. And you wouldn’t be able to efficiently assess your business’ growth.
How to avoid it: Open a separate bank account for your business. This will help assess your earning’s growth and, in turn, aid you in making better business decisions.
2. Mixing your personal space with business logistics.
Your personal and professional lives should always be separated. This will increase operations efficiency and reduce the chances of getting burnt out. Having all your stocks inside your house also affects the personal space of the people you live with. And doing your operations at home can influence not only the space but also the time you spend working. This increases the possibility of business-centered stress felt through personal time.
How to avoid it: Look for quality storage facilities for your stocks. If there’s no other choice at the moment, then using a garage or a separate room can be a better option. At least that way, you can still distinguish a separation for both lives.
3. Mixing people from your personal life with your business manpower.
Caring about the people you work with and the people who work for you is healthy for your business. But hiring people you care about just because you care for them will not help you in any way. Business is business, and you should look for skills instead of sentimental value. Hiring people you have personal relationships with might result in management complications and even the fallout of your relationship as well.
How to avoid it: Focus on outsourcing. If you can do your business digitally, outsourcing makes your talent pool global. It would also be financially wise since you’d be hiring freelancers across the globe. That means their expected salary range might differ from those working in your area.
4. Mixing and Juggling all responsibilities alone.
Being a “solopreneur” looks good on paper. But it can be taxing and messy in the real world. Even if you think you can handle every aspect of your business, you still shouldn’t. Doing this might cause burnout before your business gets bigger. And if you’re handling even the most basic parts, who would handle the bigger things? Poor workload management leads to poor time management, which then turns to missed opportunities.
How to avoid it: Prioritize business growth and embrace leadership. Your role is to lead. This is your business, and you should be focusing on how you can grow it instead of tiring yourself out with things other people can do. Like everyone else, you have strengths and weaknesses. Focus on what you’re good at and let others help you with the rest. If you can’t trust anyone with the operations, you should then hire a specialist who can do it better than you.
Pro-tip: Establishing good relationships with other entrepreneurs is also beneficial for your growth. Learn what you can from those who started before you and help those who started after you. Investing in people and relationships might be the saving grace you’d need if everything goes belly up.
Keep in mind that starting a business is not easy. You are not alone, and it’s okay to learn on the way. Making mistakes is a part of growth. But no matter how scary it seems, the only way you’ll truly fail is if you don’t start trying.