5 Mistakes To Avoid When Forming A New Company
Entrepreneurs usually make little mistakes, costly enough to make their business crash at an early stage while others might undergo liquidation. For every successful business that needs to thrive, it requires strategic reasoning and analysis to achieve your business goal. As an entrepreneur trying to set up a company, you should know the SWOT analysis (Strength, Weakness, Opportunity, and Threat) as applicable to the kind of business you are trying to start with, backed up with morale and business plan.
Below are some of the mistakes every entrepreneur must avoid when forming a new company.
1. Learn to overcome your fear
One of the greatest mistakes you can make at the initial phase of every business is to be afraid of failure. In any startup, you shouldn't be scared to fail, because failure might be your key to success. The first step in escaping fear is to be clear about how you create it.
2. Draft your business plan
Every business that needs longtime success must adopt a strategic business plan. There should be a feasibility study of the market. Advisably, it is required to set up the operations of the planned business venture, which must include startup costs, fixed investment, and operation costs.
Prepare an income statement so that you should be able to know the type of services required and how much they will costs. Outline your plan, conduct a market survey, or perform market research, as this will give you a clear view of the revenue you can expect from this venture, review it, and analyze all data to ensure everything is intact.
3. Register your business name
Another big mistake that startups should avoid is the risk of not registering their business. There are many advantages of registering a venture or company which include
- It gives you a unique identity and protects your identity (this shows some proof that the business legally exists with its name and address). Once you register your business, it is now under the law, and no one else could have the same name as your business name.
- Registering your company's name protects you from personal liability; for example, if things go wrong, it protects you from losing your business and property.
- It is easier to get bank credit and investment from investors. If your company name is not registered, you will not get access to loans from banks, which is also applicable to investors. No investors will give you share if your business is not registered.
- Registering your company name for continuity's sake. Human beings live and die, but business can last forever as they can be transferred from generation to generation.
4. Understand your market and target audience
Some businesses make a huge mistake because they fail to understand the customers they are serving. Most importantly, know what, how, and for whom to produce. Advisably, know the kind of goods/products needed by your customers and also introduce new services to the market.
5. Recruiting the wrong people to work for you
Many businesses fail because they don't hire specialized staff to work for them. Ensure that your workers have the required skills for the different positions needed to fill for the effective management of your company.