Common mistakes when setting up in 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.

There can be serious consequences for your business if your projections are not realistic.

Over-optimistic forecasts about market size

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

Cash levels can be quickly depleted if you recruit too many people, buy unnecessary equipment or spend too much on business premises.

Effective cashflow and income forecasting can help you avoid this.

Inaccurate forecasting is often linked to poor market research, so it is essential to get your research right.

Focusing on sales volume or size not profit

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

Overtrading can occur during the rapid expansion of a new business when it takes on more orders than can be supported by its working capital or net current assets.

This can have serious repercussions.

Diversifying too soon

There may be a temptation for you to tap into a new market or geographical area, but keeping a clear focus on your core business is crucial.

Diversifying too quickly can actually increase your business risks during the vulnerable start-up stage.

Poor planning

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