Common Challenges Startups Face in the First Year
The first year of starting a business is the hardest. Many businesses are made and dissolved in the first year for lack of balance, proper planning, and failure to control spending. You can have all of your paperwork in order and legal hurdles cleared, but you’re more likely to fail if you don’t have a solid framework: employees, equipment, customers, and the infrastructure to support them. Discover the following tips to help you face some of the more common challenges that arise in the first year of operation.
Paying Attention to Invoicing
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You likely have a base of customers or you wouldn’t be opening your own doors as a business. To best ensure accurate recordkeeping, you need to set up an invoicing system.
Discuss billing terms with your customers in case they want to take advantage of a discount for early payment. Establish recurring invoices for regular orders so that you can automate some of the billing processes. Use accounting software to streamline these processes. Place a weekly note on your calendar to stop what you’re doing and work on invoicing. Over time, you’ll be able to hire someone to do the job, but for now, invoicing is something you need to make sure gets completed.
Ignoring Equipment Costs
You need equipment to run your business, but that equipment can be costly. It’s a consideration you need to weigh carefully, especially if you have a small warehouse or building operation that requires the use of a telescopic forklift or telehandler to move products from one place to another. Resist the urge to go and buy brand-new equipment from the beginning. Used equipment on the market is often a result of someone being overzealous with equipment purchases only to sell them at a liquidation sale.
Consider renting what you need in the first year of operation. The cost of the rental is deductible from your business taxes even though you are unable to take advantage of depreciation. If something breaks on the equipment, you can get assistance from the rental company for repairs instead of trying to find a mechanic who works on the type of equipment you’re using.
Deciding How Many Staff Members to Hire
Startups naturally want to hire as many people as possible. You want to make sure that you have enough people to do the work that you need to do in a timely manner. What you want to do is keep staffing levels in check. Focus on hiring people who have the skills to do their jobs well, and hire the best possible talent you can afford. Consider what people can add to your startup both now and year after year as your business develops.
The tips above are designed to help you get your business going so that you don’t have to close your doors after the first year. Be conservative with your financial decisions, keep your customers happy, and focus on growth so that you can start your second year with a bang.