5 mistakes every business owner makes

Many of us have passions that we’d love to spend a lot more time enjoying but for increasing numbers of people, their interests are becoming their livelihoods. Whether you’re a cake baker, car mechanic or you’ve invented a new product, making the move from part-time passion into fully-fledged business can be tough. Converting your enthusiasm for your product or service into a successful business model doesn’t happen overnight and once you throw marketing, legal groundwork and financial forecasts into the mix, it’s hardly surprising that an estimated half of all new startups in the UK fail in the first five years. With the right support and planning, however, you can ensure that your venture grows into a sustainable, profitable business. Our list of the five most common mistakes made by business owners will alert you to some of the likely pitfalls:

1. Over-marketing

When you start off in business, enthusiasm can very often lead to a situation where companies are blanket- marketing at everybody, without really focusing on who their core demographic is. With the limited time and resources you have, there’s little point in marketing to people who are blatantly not going to use your product or service. Target your marketing only at people who are a great fit for your business and those most likely to need you.

2. Not securing your patent

It’s vital that you secure the legal rights to your product or service so that no-else can use it or accuse you of passing someone else’s idea off as your own. Patenting and trademark law can be a minefield, so it’s really important to get the correct advice on this, and have any contracts reviewed before you begin marketing and trading.

3. Being too risk-averse

Running a successful business is a delicate balancing act between caution and courage. In order for your business to flourish, you’ll need to reach out to potential investors, who will enable you to accrue extra capital. There is, of course, an element of risk with any new investment but without it, you won’t be able to grow your business, so courage is key!

4. Buying a business without warranties, indemnities and disclosures

If you’ve bought your business, or are thinking of selling your own, warranties, indemnities and disclosures are crucial parts of the legal process, allowing all parties to have a complete understanding of the business up for sale. Warranties are a series of facts about the affairs and assets of the business in question and indemnities relate to protection offered to the seller in the event of a warranty claim. Responding to the warranties, the seller and their legal team will then prepare a disclosure letter, detailing specific information about all aspects of the business being sold. It will also detail all known exceptions to warranties and once the buyer has accepted the disclosure letter, the seller is no longer liable. It is very important, therefore, that your disclosure documentation is accurately prepared by an experienced legal team to avoid any potential issues following the sale.

5. Not thinking like a business owner

If you take customer criticism personally, dislike chasing payments and capitulate every time someone asks for a discount, then you’re not thinking like a serious business owner. Always keep in mind that your business needs to make money to run and presenting a professional and trustworthy front will endear your customers to you. Use social media to its best advantage. This means never getting into petty squabbles if a customer is unhappy. Always respond quickly to comments and do so in a friendly and constructive manner. Never offer discounts just because someone asks: remember your bottom line and stick to it!

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