Starting up a business on your own can be an incredibly rewarding experience. For the first time, you’re calling the shots and running the operations. You’re your own boss, and that is amazing. However, it can also be isolating, and it can mean that you don’t necessarily have anyone to bounce ideas off. Or, sometimes, every person you’ve ever known is now an expert on your business and offering advice. As you set out on this journey, it’s helpful to know what other entrepreneurs struggled with when they started their businesses. Here’s a quick look at five mistakes solo entrepreneurs commonly make.
1. Failing to Have a Business Plan
Even if you have the plans in your head, it’s important to get them all down on paper. According to research conducted by software company BPlans, this single step doubles your chances of growing. Your business plan should include:
- An Executive Summary- A brief “elevator pitch” of what your company does and what will make it successful, comprised of data presented in the other sections.
- A Business Description- An outline of who you serve, what you do, your legal structure, your mission and values, and any items that make your business unique or give you a competitive advantage.
- A Market Analysis- A window into where your company sits in relation to others as well as who your ideal customers are.
- Organization Management- Even if you’re running the show, you’ll likely be calling in specialists, contractors, and extra help from time to time. Make note of any duties you’ll need assistance with, and who will be covering them.
- Sales Strategies- Your price strategy and how you plan to promote the business.
- Funding Requirements- At the very least, come up with estimates on what your business needs in order to get off the ground. Consider start-up costs and funding you’ll need down the line for growth.
- Financial Projections- Using market trends and anticipated revenue, identify at which point your company is expected to turn a profit and what the margin will be.
2. Not Having a Safety Net
Many startups don’t qualify for traditional lending, leaving solo entrepreneurs to fund their ventures on their own. During the initial phase, paychecks can be sparse. Research presented by Small Business Trends concluded that nearly a third of business owners don’t take a salary at all. Using data from your business plan, calculate how much money you’ll need to have set aside for your own personal expenses while you’re getting your business off the ground. It’s also helpful to explore your funding options beyond loans before you get started. That way, you’re prepared to leverage options as needed. For example, you may be able to use invoice factoring to solve cash flow problems. This is something you can set up in advance, even if you don’t plan to factor right away.
3. Not Having Support
You may be a solo entrepreneur, but you can’t do everything alone. Whether you choose to outsource certain tasks, like invoicing or book keeping, or bring on sub-contractors and freelancers to assist with tasks and scale with peak periods, having a strong and trustworthy support system at the ready will keep you moving forward. It can also help you maintain focus, keep your energy up and avoid burnout.
4. Expecting Overnight Success
Serial entrepreneurs, or those who launch repeated companies, expect to have setbacks, yet they also create a realistic timeline of events. It can take months or even years to be on solid ground, depending on the risks and investments involved in your venture, so be prepared for this. You may also find it helpful to keep a running log of the different ideas you’ve tried to streamline processes, cut expenses and generate new sales.
5. Not Understanding Demographics
You should have at least touched on your audience/ customer base some with the business plan, but you’ll need to dig a bit deeper than that to understand who you’re serving and what they can afford. For example, one of the things we do here at Interstate Capital is help our clients mitigate risk by helping you identify the customers that can truly afford to pay. In knowing this, our clients can make smarter decisions about whom they extend credit to and how much they offer, so cash keeps flowing in. You can also look at demographics from a sales perspective, and use the customer data you have to increase the sales per customer, identify new markets and more.
Interstate Capital Can Improve Your Cash Flows and Support Your Growth
At Interstate Capital, we help small and mid-sized companies improve their cash flows through invoice factoring. In short, we purchase invoices from our clients and then collect on them, so the business owner gets cash right away instead of waiting 60-90 days or more for payment. We also provide access to reporting tools 24/7, help our clients minimize risks, and connect them with additional tools and resources that drive growth. Get your free factoring assessment today.