Avoid the pitfalls
Good planning will boost your chances of success. The tips below will help you avoid the classic pitfalls during the start-up and running of your business.
Personal motivation and determination
Do you have the determination and personal characteristics you will need before you really get started? Do not overestimate yourself as an entrepreneur. Setting up a new business can quickly take up a lot of your time and affect those closest to you. Most people can cope with this for a while. Consider whether you are willing to sacrifice holiday, free time and time with your family in order to realise your dream.
A classic pitfall is failing to prepare realistic budgets for the start-up phase. Revenues are often overestimated, while expenses are underestimated. If this happens, you may experience problems meeting your financial commitments. Make sure you include all your expenses.
Do not overestimate your market
Many entrepreneurs overestimate their market. Make sure your customers will buy from you before you commit yourself too much. Even if you have had good feedback from your friends, you cannot be certain that they will buy from you. Make sure you are sure about your market before making any important decisions.
Check all the formalities
Familiarise yourself with the requirements that will apply to your business. You can also run into trouble if you fail to meet the deadlines for submitting reports to the public sector administration.
Choose an appropriate organisational form
Choose a form of organisation which is appropriate for the risks that you will take on and the scope of what you will start with. For example, it may be a good idea to set up a private limited company instead of a sole proprietorship if you are taking a big financial risk.
Sound financial management is key
Send invoices to customers as soon as you have completed the assignment or sale. It is important that you receive the money quickly. This is an important factor as regards liquidity and your ability to pay the company's bills. In the case of major assignments, you could agree part-invoicing during the assignment period. Enter into written agreements with your customers which stipulate when invoices will be sent.
If you do not have sufficient time or the skills needed to prepare accounts yourself, you should ask someone to do this for you. This will free up time for what you do best and what will generate money. Making mistakes in tax and value added tax calculations can quickly become an expensive business, especially if you need assistance to correct the matter later.
Good agreements are vital
If you run a business together with other people, it is important that you avoid disagreements over the running and direction of the business. Before starting a business, you should sign an agreement which takes into account "both the good days and the bad".
Things Take Time
It often takes longer than you think to really get a business up and running. This means it will also take longer before you start generating revenue. You will also have to fulfil your financial obligations at the same time. Make sure you have enough start-up capital to do this.