By Daniel Mason
The road to business success is rarely smooth. Small business owners face countless challenges during their struggle to break even, and often make myriad mistakes along the way. From the myth of perfection to drawing up contracts, here are some of the tips and tricks entrepreneurs wish they knew when they first started their businesses.
Tax is Not Optional
Entrepreneurs who start their businesses as a small home-based side project often neglect to declare their income or file their taxes, because they “don’t earn enough to make it worthwhile.” However, as the company expands, it’s important to bring your financial and legal status completely above-board. Whilst tax bills take a significant portion of your profits, the penalties for failing to pay can quickly accumulate. The tax office may take a while to track you down – but when it does, the fines could ultimately run your business into the ground.
Perfection Doesn’t Exist
Forethought is essential in business, and it’s generally impossible to secure financial backing without a solid business plan in place. However, these plans don’t need to be perfect. Indeed, in the business world, perfection is a myth, as your market and customer base are constantly evolving. It can be tempting to spend years working on a business plan, fine-tuning every minute detail. However, it’s better to take a leap of faith and adjust your plan as you go along, rather than remain in the planning phase forever.
Failure is Catching
Up to 80% of new businesses fail within their first year, and small business owners live in fear of this chilling statistic. However, even if your enterprise survives, it could still be seriously affected by less fortunate companies. Before entering into a partnership with another business (whether for marketing, delivery, or another purpose), thoroughly assess their financial status. If they fall into insolvency, you could be faced with a long wait for reimbursement – so build this scenario into your disaster plan.
Always Get It in Writing
Solo entrepreneurs often neglect to draw up official client contracts, particularly if they’re working for local friends and acquaintances. However, things can quickly turn sour when money is involved, and a gentleman’s agreement holds no sway in court. If a client refuses to pay – or another business refuses to honour their commitment – you will have far more legal protection if the initial agreement was made in writing. If you can’t afford to have your contracts drawn up by a legal professional, there are numerous free templates available online.
Family Feuds are Dangerous
Would-be business owners often enlist the help of family members, believing that they will always have their best interests at heart. However, business woes can rapidly tear even the closest of families apart, particularly when money is involved. Even big corporations are at risk – the chairman of Samsung was recently sued by his own siblings during a battle over inherited shares. Always draw up legally binding contracts – just because your business partners are also blood relatives doesn’t mean you should forgo the formalities.
