If you have an idea for a product burning to get out onto the open market or have always wanted to turn your hobby into a full-time business, then it is easy to get overly enthusiastic about your chances of commercial success.
Optimism is essential if you want to be an entrepreneur, but an equally important quality is risk management. Sleepwalking into business without a solid idea of the challenges you will face is a recipe for disaster, which you can only mitigate by building a strong idea of the issues you will face when you found your company.
This is not to say you should be discouraged. If you have a clear idea of the challenges on the horizon but still feel capable enough to overcome them, then it is a reassuring sign that you are on the right track.
Here are the hidden obstacles to consider if you want to start a business in 2021:
1. You could be charged heavily for basic overheads
An inevitability of any business is the bills you will pay every month, rain or shine. These payments include electricity and water, property rental fees, website costs and staff salaries.
Take your monthly water bill, for example. It is tempting to believe that this is always correct because it is based on how much water you use, but this isn’t always the case.
In fact, some companies reportedly pay more for their water than they need to, which is why there are now specialists like Business Water Quotes who will help you determine whether this is the case for your business.
Ascertaining whether your overhead costs are reasonable or unsustainable is one of the most influential decisions you will make as the owner of a company, especially when it is in its infancy.
2. You could be quoting too low for your services
One of the hardest tasks for any business owner is knowing what to charge for products or services. When you’re starting out, generating momentum is the most important goal in order to find more customers and begin receiving regular income.
As a result, it is tempting to undervalue your services in order to convince prospects to buy from you instead of your more established competitors.
This is a dangerous game to play.
In many industries, you will actually lose respect for charging too little for your products or services. If you sell luxury items, for instance, you may be better off charging more for your products than your rivals in order to catch the attention of customers who take comfort in steep price tags.
If, however, you are struggling to find customers, then dropping your prices gradually is a sensible course of action.
3. You may have grown too quickly – sometimes scaling isn’t useful
When you first start your business, you may have grand visions of offices filled with employees or a chain of stores lining the country from town to town. Although the ambition to become a huge company is admirably ambitious, it could be ego-driven rather than strategic.
Despite the glamorous image of owning a large corporation, you may find that scaling is not in the interests of your business. A lot of the time, keeping your business small for as long as possible is actually beneficial for your long-term success.
Investing in unnecessary amounts of capital and staff costs will prevent you from becoming profitable for longer, running the risk of bankruptcy and lower service quality.
Instead, be driven by logic and reason rather than ambition and ego.
This post was written by Sophia Anderson and originated on Your Coffee Break.