When you are starting a business, you want everything to be perfect. However, no business takes off without a hitch. Never happened. So as much as you try to avoid pitfalls, know that you will run into ruts here and there. What you need to remember is that it’s normal and that there is no reason to give up just because you are having a bad day.
However, you do want to minimize the problems you will run into. Here are some mistakes I’ve heard firsthand from people who’ve made them. Some of these mistakes were costly, and all of them were avoidable.
I figured that I would save money and do the accounting on my own. I’m not that great with computers so I decided a notebook should work fine. But things got messy, the math got too complicated and it became a real mess.
Proper accounting is essential. From the get-go make sure you have a system where you can keep track of all your expenses and earnings. Freshbooks is a wonderful accounting solution. Take advantage of their 30 day free trial, and then you can sign up for one of their plans. (They also have a limited free plan.) Freshbooks updates your expenses automatically using your bank account information. You can also send invoices, collect payments and track time with their program. It’s intuitive and easy to use. One great feature is that customers can pay you online by clicking a link in the invoices you send them. It makes for faster payments.
I wanted to have a separate phone number for my business. I invested in another phone line and allowed the salesman to persuade me into buying the most expensive phone, and the plan costed me $60 a month. That was very expensive just to have a different phone number. Since I was convinced to sign a contract, it costed me to terminate the plan when I realized it wasn’t cost effective.
If what you are looking for is a separate phone number for your business, you don’t need to spend a lot. Here are two companies that offer affordable plans for a growing business:
Ask about simply having your business number forwarded to your cell phone or home number. That will always be your cheapest option.
We were advised to make a big splash with our advertising. We spent our entire startup advertising budget taking out full page ads in a few publications one week. We did not see the desired results from those ads, and the feeling is that we could have advertised differently, more inexpensively and most of all more effectively.
Repeat advertising is the most effective. So if you have two options – go big and advertise once a month, or go smaller and advertise every week, go with advertising every week. If you are servicing your community, then start with your local circulars. You don’t need to go bigger than that. Test one advertising venue consistently and see whether it brings the results you want. Don’t forget that word of mouth is your best advertising. Offer incentives to customers who refer new customers.
I decided to take credit cards right away. I jumped in and signed a contract with a well known payment service company. The monthly fee seemed reasonable and I wanted to offer my customers the smoothest shopping experience possible. Most customers ended up paying with personal checks and I hardly ever used the payment service. Then, one month when I didn’t use it at all, I was charged hundreds of dollars in fees. (For not using their services.) It costed me another hefty sum to cancel my contract with them. It was a total waste of money, and not necessary for the kind of business I had. Most people are more than fine paying with checks or cash.
You don’t need to start taking credit card payments right away. Just let your customers know in advance that you only take cash or check. (Put it on the ads.) A home based business that is just starting out should focus on other important things first. (Like establishing a solid customer base.) The one exception is if you are starting an online business. In that case, you will need to take credit cards online. That’s one of the reasons Freshbooks.com is so great. For $19.99 a month you have a complete accounting program, complete with the ability to accept credit card payments online.
I wanted to hire a woman as a saleslady in my home based business. I was feeling pressured to hire someone fast, so I didn’t check each candidate out sufficiently. I ended up hiring a woman who I thought would do a decent job. Big mistake. A decent job is not good enough. In retrospect, I should have been more wary of a prospect who only talked about the benefits she wanted to gain, and not what she was able to give. My sister-in-law saw what was going on and gave me the push I needed to fire this woman and start the hiring process again.
Hiring is not easy. When you are in a rush to hire it’s likely you will make a mistake. Consider what you are really losing by waiting until you find the perfect candidate, and what you will lose by hiring the wrong person for the job. You will find that it is worth your while to extend your search and not jump to any rash decisions.
I quit my job when I started my business. I wanted to put all my energy into the new venture. After a while I realized I wasn’t making enough profit to keep us from going under at the end of the month.The money I wanted to reinvest in the business got eaten up by household expenses, and my business ended up failing. After all that, I didn’t even have my original job to fall back on, and I needed to enter the job market again.
Don’t quit your job unless you have a clear financial plan. Realize that most new home based businesses will not make a profit for at least 6 months to a year. Make sure you take that into account before you resign from your job.