One thing most business owners can agree on is, it’s not easy. There are unexpected pitfalls and difficulties all over the road to success – things that business owners wished they’d known before starting their journey.
In an effort to help you expect the unexpected, we’re going to explore what you can expect when starting a business.
Specifically, we’ll be covering:
- Startup costs
- Client/customer management
- Personal wellbeing
- Business plans
Nobody expects to start making a profit in their first year, but a lot of business owners don’t realise how long it could take to actually start seeing any profits at all.
On average, the majority of businesses aren’t profitable until their third year of business. Remember, that’s on average, so it’s not even a guarantee.
When reviewing your business plan, you should factor that into your budget. Ask yourself, could we stay afloat without seeing a profit for 3 years? If the answer is no, you might want to rethink your strategy.
Finding yourself in a financial hole after the first year with no backup plan or extra cash can quickly lead to disaster.
Not everybody appreciates how many there are, or how quickly they can add up. To prepare yourself, you should factor some of these common startup costs into your budget.
Most insurance brokers will offer tailored insurance policies depending on your industry, but generally, these are the most common insurance policies you’ll need:
- Public liability insurance – if your business comes into contact with members of the public.
- Professional indemnity insurance – if your business gives advice or offers a professional service to other businesses, or if you deal with client data or intellectual property.
- Employers’ liability insurance – if your business employs staff.
- Business buildings insurance
- Business contents insurance – protect the contents of your business premises, your business equipment and tools.
- Stock insurance – if you hold any stock, whether on your premises or in storage.
- Product liability insurance – protects you should a customer of yours suffer damage as a result of a faulty product you provide
- Personal accident insurance
- Business interruption insurance – if your business is disrupted by material damage caused by an event such as a flood or fire.
- Business legal protection insurance – covers your commercial legal expenses and protects against the potential costs of legal action brought by or against your business.
If your business makes money from any kind of original intellectual property, you need to protect it against copyright infringement. There are different fees and procedures depending on what you’re trying to register.
There are a lot of hidden fees that can quickly add up in the daily running of your business. Some basic costs that should be in every business owner’s budget include:
- Building costs – rent, utilities, maintenance, and business rates.
- Employee wages and recruitment
- Equipment and supplies
- Sales and marketing – website costs, transaction fees, and marketing agencies.
- Administrative costs – for solicitors, accountants, and company registration.
- Technology costs – for hardware like computers and phones, or helpful programmes like accounting software and work management tools.
- Taxes – VAT, capital gains tax, income tax (if you’re self-employed), and corporation and dividend tax (if you set up a limited company).
Probably the most difficult part of any business is the customers/clients. They’re unpredictable, sometimes difficult, and, unfortunately, the most important part of the business.
Know from the beginning that you can’t keep everybody happy, and do your best to prepare for some difficult interactions.
The good news is most client interactions will be positive experiences for everybody if you treat them with patience and empathy. If you want some detailed advice on how to deal with clients, check out our article for some simple techniques.
On a rather glum note, you should be aware that starting a business will put a strain on your personal life. As the business owner, there are no set working hours, no guaranteed wages or holidays, and very little in the way of stability.
If you do have loved ones as part of your support network, just make sure you all understand the difficulties that lie ahead. Starting a business won’t just affect your life, it’ll have a huge impact on their’s too. So working together as a united front will make a world of difference when things get tough.
There will always be competition in your industry. You should do extensive research on your competition before you get started. Ask yourself what makes you different and why customers should choose you over your competitors.
You might offer a better service, a better price, a unique product, or even a similar service in an untouched area. No matter what it is, make sure there is room for you in the market.
With that in mind, it’s important to remember that other businesses will emerge as you continue to do business. New competition will always be popping up, trying to steal some of your piece of the pie.
It’s an inevitable fact of business, and there’s not much you can do to prevent it. But you can mitigate its effects by staying alert. Keep an eye on the market, watch for new competitors and what they’re offering so that you can quickly respond.
If a competitor arrives offering a better price, you might need to rethink your own prices.
If they offer a service you don’t, consider including that service yourself.
There are no quick fixes. The best you can do is keep your eyes open and stay one step ahead of the competition.
The truth is, the best-made plan in the world is still just a plan. And, in reality, that plan might not work. This could be for a number of reasons – stock prices might change, public interest could change, or some new technology could send your industry in an entirely new direction.
If this does happen, the only thing you can do is make a new plan. Think of companies like Amazon and Netflix. Amazon started as an online bookstore, then pivoted the business model to sell absolutely everything.
Netflix, on the other hand, started as a DVD rental service. It could have easily gone the way of Blockbuster if it hadn’t evolved with streaming technology.
Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!
Find out more here.