When you start a business there is quite rightly a lot of optimism around.
The advantages of being an entrepreneur are plentiful and can prove to be the solution for those who are looking for a way to change careers, deliver on that killer idea, or simply wanting to do something different.
It is however a journey not without risk and it is critical to learn the lessons of all those entrepreneurs who have gone before.
And some of those key learnings should be taken on board before you even get started because decisions you make in the beginning can often prove to be some of the most important ones you will ever take.
So here’s a list of 5 common start-up mistakes to avoid at the very beginning of your exciting new business adventure.
1. Doing everything yourself
The curse of the new Founders and CEOs.
When they should be focusing on the big picture new entrepreneurs can often get bogged down in admin and the details of running a business.
They quickly get overwhelmed with the variety of tasks they have to do, become worried they are not doing things correctly and then disillusioned that progress is happening at a snail’s pace.
Delegation is vital to success. You can not do everything yourself so play to your strengths.
Step back and identify the parts of the business you are not going to be good at and either delegate them to someone else in the business, hire someone or outsource them to another company.
2. Not making it clear where everyone stands
A start-up business will frequently involve friends and colleagues where the assumption is that as those involved know each other all that is needed is a handshake or a verbal agreement about how the business shall be run.
In short that’s a bad idea and you should have a shareholders agreement (also called a founders agreement) to make it clear where everyone stands from the outset.
Memories quickly fade and the rapid pace of events overtakes clear thinking so the best practice is, and always has been, clear and simple – get it in writing.
A shareholders agreement may save those friendships further down the line!
3. Being unaware of legal obligations
Often overlooked and underestimated by new businesses make sure you have the right ‘terms and conditions’ (T&Cs) and website policies in place.
T&Cs will govern the sale of your product or the supply of your service and protect both your business and the customer.
Online sales customers must also be able to access your ‘website privacy and cookie policy’ so they know how you are protecting their personal data and using cookies.
There are some practical pieces of information you need to let your customers know about too and these apply whether you sell or advertise over the Internet, by e-mail or text message.
Depending on your business, if you store data of any kind you need to be registered with the Information Commissioner’s Office or this could void any cyber liability insurance and put you in breach of the Data Protection Act.
4. Thinking Intellectual Property (IP) does not apply to you
Many new businesses do not think IP is something which applies to them.
However IP exists in every business, whether it’s a name, logo, flavour, model, machine or information – and it belongs to you.
But only if it is protected, so be aware of what is yours and think about whether it needs protection.
Protecting your IP via a trademark, patent, copyright or registered design is not always cheap and you may not consider the costs of protection to be worth it in the beginning.
But try not to ignore it. Protecting your IP (and staying clear of others IP!) could be an important part of your business’ future success.
5. Not getting insurance
And don’t forget about business insurance.
The insurance you needs when you start a business will depend on what it does.
For example there is always a risk a product can cause harm to someone or something so you might want to consider product liability insurance to protect you in the event of something going wrong.
If you trade from a business premises consider insurance for the premises.
If you employ staff you need employers’ liability insurance. If you run events public liability insurance is relevant.
Whatever your business get the right insurance through an authorised insurer.
Before You Go …
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