Your first year as a business owner - what to look out for?
Every year more and more people decide to walk the path of self-reliance and start their own businesses. Being your own boss has many benefits, but there are also risks and difficulties involved. Take a look at these 5 tips to avoid the most common pitfalls of self-employment.
The 5 most common pitfalls of self-employment - and how to avoid them
Ignorance of the law. As we all know, ignorance of the law excuses no one. The tax code is extremely complicated and changes often - navigating it by yourself can be difficult, if not impossible. Which is why in difficult situations you should always consult a lawyer or a tax professional - whatever you spend on their services might save you much more in the future. Still, it’s a good idea to have a basic working knowledge of tax and business law - this will help you make everyday decisions with ease and confidence.
Too many and too high fixed expenses. Starting your own business unavoidably leads to accruing some fixed expenses. Taxes, insurance, phone, internet, water, gas, electricity, office space and supplies - all these can add up pretty quickly. They might not seem like much when looked at separately, but over the course of a year these payments can put a significant debt in your budget. Moreover - high fixed costs limit your ability to invest and grow your company. It’s always a good idea to cut costs and optimize expenses, leading to a leaner, more adaptable business. It’s also a good idea to look for cheap alternatives to expensive business software - consider using an open source office suite and our affordable e-invoicing solution.
Not planning for the future. Working on the assumption that things will work themselves out is, to put it mildly, imprudent. Relying on friends, family and word of mouth to provide you with a satisfying revenue stream is naive - you should always have a plan for growth and customer acquisition. Devote some time to your new business and develop an advertising strategy - figure out whether you’d be better served by online or offline efforts, and then test your hypotheses. Don’t be discouraged if advertising doesn’t work immediately - sometimes it takes time to build a market for your product.
Neglecting customer relations. If you haven’t worked in a customer-facing business before, dealing with the public can be jarring. Treat this as a learning experience and treat every customer interaction, positive or negative, as an opportunity to improve your communication skills. Make sure to concentrate on being assertive - try to leave as little room for misunderstanding as possible, but also remain courteous and make your customers feel cared for.
Delivering subpar quality. Although most people start out wanting to deliver the absolute best product out there, sometimes things go south quality-wise. This might be due to lack of know-how, misguided money-saving or just delays and poor communication. Make sure that you do your best and promptly alleviate all issues so that you don’t wreck your reputation early.
Self-employment is more than just being your own boss. It’s also taking responsibility for your work and thinking about things you never considered before. Hopefully this advice will help you succeed in your business endeavors.