Neglecting financial planning
To achieve your financial goals, you first need to write them down. Although this sounds obvious, many novice entrepreneurs neglect financial planning, considering the process either too complicated or not important enough. And this is where they make a big mistake.
Creating a financial plan forces you to understand more clearly where you are now, where you want to be, and how you want to get there. It will also help you make better decisions in difficult times and force you to always keep the big picture in mind when you are absorbed in your daily business routine.
Take the time to calculate how much money your company will need for the next six months. Consider the following points:
- How much do you plan to earn during these six months?
- What will you do if sales are lower than expected?
- What will you do if your shop becomes popular and you receive more orders than expected?
- A well-written financial plan will not only prepare you for various scenarios, but also save you money.
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Purchasing expensive services and applications
There are many useful services and applications on the market that will help you grow your business and increase sales. But don’t rush into expensive subscriptions until you have tested several services yourself and understand exactly what you need.
For example, to create a website, you don’t have to hire a developer and spend tens of thousands of pounds on design; you can create a fully functional sales page yourself using builders such as Tilda or Shopify.
Insufficient market research
When you have a clear idea of what product you want to produce, you may want to start production right away. But without preliminary market research and evaluation of the validity of your idea, you may end up wasting your money.
Missing out on opportunities to make useful connections
Although networking is not as developed in Russia as it is in Europe or the US, it should not be neglected. After all, the more acquaintances you have, the better. Every person you meet could be a potential customer, partner or mentor. And if you yourself have useful skills or if your products are of interest to a professional you need, you can save a lot of money in the early stages of your company’s development. For example, you can give a photographer some of your products, and they will take professional photos for your website.
Useful contacts will also help you draw up a more accurate financial plan: if your new acquaintance has already dealt with a similar business, they can tell you about their experience and pitfalls that you may not have been aware of.
You can meet people on social media, at events, or even just on the street. At the same time, you shouldn’t see everyone as a potential partner or assistant. Meet people who you will enjoy communicating with and who will be interested in communicating with you.
Ill-considered advertising costs
Advertising has many pitfalls. You can spend a lot of money on paid ads and see no results. In addition, start-up entrepreneurs often have limited budgets and are unsure which advertising channels will work most effectively.
On average, start-ups spend about 5-7% of their total budget on advertising, but there is no universal figure, it is purely individual. To calculate your budget correctly, you need to consider many factors, including the product life cycle, market size and boundaries, competitors’ experience and product profitability.
Punit