Common mistakes to avoid when starting a business

It is important to make realistic forecasts about your business' potential. During the start-up phase, it can be easy to make over-optimistic forecasts, however there can be serious consequences for your business if your projections are not realistic.

Unrealistic forecasts about market size

Inaccurate forecasting of market size is a common mistake when starting up.

Many businesses overestimate market demand for their products or services leading to overproduction, excess inventory, and wasted resources, which can harm business finances.

It can also result in unrealistic growth expectations and difficulty in gaining a significant market share. 

Inaccurate forecasting is often linked to poor market research, so it is essential to get your research right. For more information, see market research and market reports and cashflow management.

Overtrading

A common mistake for new businesses is to focus too much on growing the sales volume or size rather than profit.

Overtrading occurs when a business expands faster than it can support financially. This often leads to cash flow problems and trouble meeting short-term debts.

Rapid growth without enough resources can strain operations. This strain can lead to lower product quality and customer satisfaction.

For more information, see forecast and plan your sales and avoid the problems of overtrading.

Diversifying too soon

Diversifying too soon can reduce your business’s focus, leading to a loss of competitive advantage.

Entering new markets or launching new products without thorough research can raise business risk. Especially during the vulnerable start-up stage, it can result in significant losses.

Poor planning

Poor planning will increase your chances of making business mistakes and will reduce the probability of achieving your goals.

Drawing up a high-quality and realistic business plan is essential. A business plan will help you get funding. It will also pre-empt problems and measure your business's performance.

Writing a marketing plan will also ensure that you consider your target customers and marketing objectives. It will help you set goals to address these.

For more information, see write a business plan: step-by-step and write a marketing plan.