When you’re starting a new business, you’re focused on a great idea. Then, all of a sudden, along comes reality—there’s a lot more to running a business than bringing a great product or service into the market. Here are the most common surprises our new business customers encounter in their first year in business.
1. The skills it takes to start a business aren’t the same skills needed to run and grow a business.
The vast majority of people start a business in order to pursue a passion or solve a problem. Whether you’re designing and building best-selling apps, sewing adorable clothes for kids, or teaching yoga classes, you’re putting something new into the world. Before long, however, the business needs a whole lot more than your raw talent. Many business owners come to learn that they don’t relish performing functions like marketing, accounting, customer service, or managing employees. The majority of these tasks can be outsourced, or you can hire people to do them for you, but avoiding them altogether because you want to stay focused on your true passion is a surefire way to run your business into the ground.
2. There’s a whole lot of information to track in detail.
We work with many businesses that didn’t start off tracking income, expenses, and other details related to how money comes in and goes out. It’s much easier (and less expensive!) to record all the information you need for accurate financial statements from day one than it is to get to the point of needing financial statements and having no idea where to start. Side note: if you’re in this position, we’re help. In fact, we specialize in helping businesses get all their ducks in a row, so take a deep breath and reach out.
3. Your revenue numbers aren’t as straightforward as money out-money in.
Say you manufacture and sell a physical product. The costs to purchase raw materials, manufacture products, and ship them to customers are directly tied to your revenue and (hopefully) built into the product’s purchase price. But your business also has general overhead—staff, rent, utilities, etc. Then there are your costs to acquire customers, such as ads or a marketing firm. All of these categories of expenses come back to #2 on this list—you have a lot of numbers to accurately track so you can understand whether your business is profitable and where your money is going.
4. Your business formation affects how you pay yourself and file your taxes.
Establishing a legal structure for your business has repercussions—many new business owners don’t realize that different legal structures have differing tax requirements. When choosing a legal structure, make sure you have a complete understanding of what you’ll need to do come tax time.
Starting a new business? Learn how to avoid the seven mistakes that get business owners into trouble.
5. Good people are hard to find.
It’s common for new business owners to ask a friend to help out, and suddenly the friend isn’t doing what she said she would. Hiring reliable employees to do the job well is a costly and time-consuming process, and once you have good people on board, it’s up to you to keep them engaged. But even great employees will go on vacation at times or need a sick day, at which point you need a plan to cover their workloads. Having the right staff in place at the right time is one of the biggest challenges for growing companies—even huge, established companies struggle to keep the right talent in the pipeline.
6. There are lots of tools available to help you streamline processes and work more efficiently.
We help our clients put together a tech stack of accounting apps, and there are lots of other business apps available to meet the unique needs of your business. Do your research and find the right advisor that can help you move forward with technology. Don’t fear the process of adopting new technology that will ultimately make you more efficient—the most expensive words in business are, “We’ve always done it this way.”