5 Mistakes Every Business Owner Should Avoid in the First Year

The first year of business brings a host of successes and failures. Like a child learning to walk, business owners must stumble before they succeed. Unfortunately, there is little room for error during your first year of business. For some companies, that’s the make it or break it year. You only have one chance to make a positive and lasting first impression. And knowing what pitfalls to avoid can mean the difference between making it past your first year in business and potentially closing your doors. Here are 5 common mistakes first-year business owners make that you should avoid to secure your company’s longevity.

1. Viewing Themselves as an Employee

While you’ll be spending endless hours at your establishment, you need to separate yourself from the rest of your employees. And this rule spans a few different concepts. First off, you’re not just another employee who can punch a clock and leave when the work day is done. During your first year in business you are virtually married to your business. That means the work day never ends. Be prepared to bring home paperwork, receive endless after hour phone calls, and be there to open and close the doors each day. There’s no pawning your workload off on anyone else. Don’t make the mistake of expecting your employees to be as dedicated to the business as you are. Sadly, these types of employees are rare. At the end of the day, this business is your project and your solely responsible for its success or failure. This also means that you may not receive a paycheck for the first few years. This may take some getting used to. After all, you’ve likely been an employee for most of your life. It takes some time to adjust to the business owner mentality. And while this position comes with it’s benefits and clout, it also comes with some tougher aspects, like foregoing a payday for the good of the business.

2. Not Enough Funding

Financial backing is one of the most important elements of any new business. You need money to make money and all too often, new business owners are short sighted in terms of funding. Simply taking out a loan to cover building expenses and inventory isn’t enough. You need a nest egg of savings that you can depend on when things don’t go right. And that’s not to say that you’re guaranteed to fail but there are so many unknowns with a new business, a financial safety net is essential. It’s suggested that all businesses have at least three months worth of expenses in savings. That means that if your business spends $10,000 per month on expenses, you should have $30,000 in savings. This will cover unexpected expenses, payroll, and dips in business that you may not anticipate. Living paycheck to paycheck in your personal life can be stressful but in business, it can be catastrophic.  

3. Poor Time Management Skills

There’s no room for sloppiness in business. Time management is essential for success. Without it, you’ll make unnecessary and avoidable errors. The first step in practicing time management is setting specific working hours and sticking to them. While working overtime is all part of being a business owner, burning the candle at both ends will quickly lead to a total burn out. Keep a calendar or daily planner that is broken down by time slots. Schedule appointments, specific times for certain tasks, and breaks when needed. This will help keep you organized and on task. It will also prevent you from forgetting important dates and deadlines. You’ll also need to perfect other important skills like problem solving. Business ownership is about being flexible and adaptable to change. So as much as you need to create a schedule and manage your time, you also need to think on your feet and give each problem that arises the time and attention it deserves. Never be afraid to learn more about sharpening your time management and problem solving skills.

4. Inability to Delegate

Although most business decisions fall squarely on your shoulders (unless you share the workload with business partners), delegating certain tasks is a must. Without a reliable support staff, you will burn out mentally and physically before your business ever sees its second year. It’s sometimes difficult for business owners to delegate because they want complete control of what’s happening in their establishment. And most often, this is due to an irrational fear that no one can perform to their standards. While no one will replace you as the business owner, you can’t practically do it all. Pick and choose which tasks to delegate. If numbers aren’t your thing, pass off payroll onto someone else. Do POS systems give you a headache? Allow a manager or other trusted employee set up the program and teach the staff how to use it. Figure out which aspects of your business are deal breakers for you and hang onto those jobs. All the other responsibilities can easily be shared with other, trusted employees. Not only will you be preserving your sanity but you’ll be boosting morale by showing your faith and trust in your staff.

5. Viewing Everyone as a Competitor

Sure, competitors are out there. In fact, they’re everywhere. But this shouldn’t stop you from networking and building lasting, working relationships with other business owners in your field. You’ll need to use your judgment, just as you would in personal relationships. Don’t be overly trusting but don’t be resistant to help and the opportunity to collaborate. It’s a difficult balance to strike but an important one if you want to succeed. If a fellow business owner visits your establishment, be open but guarded. Are they asking leading questions? Are they clearly just there to scope out your inventory, quiz your staff, and size you up? Or do they seem genuinely interested in working together? If they seem trustworthy, it's now time to determine how you can work together without poaching one another’s customers. Perhaps you use the same supplier for inventory and can strike a deal that reduces delivery rates for you both. Or maybe you can use the same payroll company or advertising agency and get a discount. When you view everyone as a competitor and no one as an ally, you’ll find yourself a very lonely and isolated business owner, which can hurt you in the long run.

Mistakes are inevitable in all aspects of life and business is no different. Mistakes are where you learn what works and what doesn’t and how to make changes for the better. But when you know what those potential mistakes are, you can make an effort to avoid them. So keep these first-year business pitfalls in mind before starting out.