Common Mistakes People Make When Starting A Business
When starting a small business, it can seem like you need to complete nearly a million tasks before it can get started. However, if you manage all the tasks by yourself, any one of them could lead to your new venture failing rather than succeeding.
So, to protect you from mistakes and help you make sound decisions right from the onset of forming your business, the experts at Family Bookkeeping and Consulting, CPA, have put together a list of the most common mistakes people make when starting a business.
1. No proper chart of accounts
One financial mistake you can commit as an entrepreneur is not keeping a proper chart of your books. From a record-keeping perspective, the chart of accounts is the most important planning opportunity for any new small business. A proper chart of accounts will set the tone for success as the business goes forward. Conversely, a poorly executed chart of accounts will hinder success, create stress, require professional help to fix, and could ultimately lead to the downfall of the entire operation.
2. Not using the right accounting software
If you own a business, you need your finances organized, and for that, you need to start with the right accounting software. This is the easiest way to keep track of your ledger with online software.
Good accounting software offers a handful of features, such as calculating incoming cash flow and recording business-related expenses. These applications help your business build a budget, track spending, and organize tax-related information. Many options for accounting software often have additional features, like the ability to send invoices and collect payments from customers.
3. Doing all the bookkeeping themselves
Like most business owners, you’re probably taken on the task of doing your own books and skipped on hiring an accountant due to limited funds and resources. You may perceive that you cannot afford to hire a professional at the early stages of the business. However, business accounting is a complex process; if you don’t understand the accounting cycle, you could lose tons of money.
As an entrepreneur, you should also consider hiring a bookkeeper to save valuable money and time, as you could use the extra hours to build your business or spend with your loved ones.
4. Neglecting to make a business plan
Many rookie entrepreneurs fail to prepare a business plan which is one of the biggest mistakes one can make. Writing a business plan is an important part of creating a sustainable business and standing out from the competition. These plans can also show your team what you are striving for, provide a rallying point, and help you track your progress.
5. Inadequate financial preparation and resources
It’s common for entrepreneurs to neglect financial planning and lowball how much capital they’ll need to get their business up and running. The result is often inadequate financing to achieve your goals and/or a cash squeeze just as the business is hitting its stride.
To avoid such problems, be sure to prepare financial projections for your new business, especially for the first twelve months. This can also help you secure financing and investments.
6. Failing to monitor the market
One of the biggest mistakes you can make when starting a new business is not doing market research. You must learn about the competition and understand how you can differentiate yourself from them. Competition can be other small businesses carrying the same product or service as you.
Therefore to understand the market landscape, you’ll need to do some research. You’ll also want to evaluate whether the market is just a trend or if it’s a sustainable category you can grow a presence in over time.
To avoid these and other mistakes, reach out to the experts at Family Bookkeeping and Consulting, CPA. We are a chartered professional accountant in Kamloops, BC, and our firm focuses on serving small to medium-sized businesses. We understand how hard you work and how valuable your time is. Our online accounting system will help you build and grow your business by providing you with real-time financial status, so you can spend less time on administrative tasks and more time on what you enjoy. We offer services like bookkeeping, statutory tax filing, payroll, business consulting, budgeting, and CFO services. We serve clients across Chase, Cache Creek, Falkland, Monte Lake, Blue River, Ashcroft, Barriere, Kamloops, Enderby, Savona, Merritt, Nicola Valley, and the surrounding areas.