4 Common Pitfalls to Avoid as a New Entrepreneur

There are dozens of reasons new companies struggle in their early years. Though your young enterprise may be up against factors outside of your control, you can steer clear of many financial, legal, and organizational problems simply by planning ahead. Consider four areas in which new entrepreneurs typically stumble and how you can handle these issues with confidence.

1. Managing Legal Concerns

Before opening your doors, you must select your business's legal structure. Options include a limited liability company, a sole proprietorship, a partnership, and various kinds of corporations. Choosing the wrong business entity could leave you with an unnecessarily large tax burden, personal financial liability, and difficult professional relationships. 

Entrepreneurs must also be careful to develop contracts to ensure that business partners, clients, employees, and contractors fulfill their obligations and do not cause harm to the company. A simple handshake may not prevent issues such as financial disputes, unfinished work, and loss of intellectual property.  

2. Hiring Employees

Adding new members to your team is costly; bringing on too many new people or making the wrong types of hires could ruin your bottom line. The first step in the hiring process is identifying the nature of the work that must be completed. This way, you can determine whether a freelancer, a part-time employee, or a full-time employee is the best fit for the job. Similarly, you can pinpoint the level of education or experience a qualified candidate must have.  

If you are unsure how many people to add to your team, start with the absolute minimum. You can always hire more employees; downsizing your staff can be trickier.

3. Staying Organized

Poor organizational habits can lead to budgeting issues and decreased quality of customer service. To keep your finances in order, invest in software that helps you keep track of your expenses, revenue, and payroll. Some payroll platforms may even help you save time by setting up automatic payroll scheduling, same-day direct deposits, and automatic tax filing.

Organization matters in other areas, too, and you can also invest in enterprise software to manage field staff. This software can help you develop employee schedules, meet deadlines for clients, and quickly send out invoices. When you keep your business organized, benefits range from fostering a peaceful work environment to maintaining repeat customers.

4. Marketing

A common mistake associated with marketing is not properly identifying and reaching your target audience. Trying to communicate with everyone is not cost-effective, while focusing on too narrow a group limits your growth. To start identifying your target market, make careful observations about those who purchase your products or services. Note the things they have in common, and add these factors to your target audience description.

Entrepreneurs may also hold their company back by investing too little in marketing. Promoting your products should consume a significant portion of your budget when you first open your doors. Remember that marketing isn't all about placing ads in third-party locations; having your own user-friendly, informative website is key.

Many people aptly compare starting a company to having a child. Your small business requires detailed preparation, an organized environment, and a great deal of time and money in order to thrive. By dodging these common missteps, you can increase your odds

When you’re ready to take the next steps in advancing your career, visit BlueSteps for workshops, career mapping, and job search strategies. Become a member today!

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