After you have already decided what kind of business to develop, you should pay attention to the operating costs that arise from it. If you start to compare the table with the actual and operating costs, it may turn out that the former turn out to be much higher than the latter. This happens when, as an entrepreneur, you fail to account for the additional costs of your activity. For example, don’t forget that your staff salary costs include the costs of providing work clothes, insurance, occupational accident insurance, etc. Put at least another 40% towards salary expenses to make sure that you will be able to plan your calculations better.
Tip: At the very beginning, analyze the niche in which you want to realize yourself. Research the competition and try to get input from people in the business environment you’re targeting. There are also quite a few free online accounting calculators that you can use to predict your expenses. It is mandatory to use the services of specialists and accounting firms.
- Neglecting the costs of starting a new business
As a small business owner, you need to be aware of what seed funding you need. The difficulties that could arise are the following: too great expectations for an increase in sales and the amount of turnover, neglecting the real costs, desire for instant profit. The reality is usually different: it often happens that sales are below the desired level, and some customers delay their payments.
Tip: Do accurate planning, avoiding an overly optimistic forecast. Calculated in addition to the initial costs and the funds needed to cover current ones.
If you need additional working capital, the terms of “Fintrade Turnover” are friendly to small businesses – the only thing you pay as a user to use this service is a fee that depends on the amount you used for the given period. That way, you have as much money as you need when you need it. You can use “Fintrade Turnover”, for example, if you need funds to buy goods or to offer a wider assortment. With it you guarantee maximum benefits and successful business development!
- Irrational pricing of the goods or services offered
In pricing, you must consider both production costs and a fair profit margin, as well as the real value of the product and market demand.
The prices of your products or services are the market’s measure of their value. For this, you need to calculate the market price, calculate whether the production costs are justified and calculate the sales volume carrying a good break-even point.
Tip: When calculating the price of the product or service, it is important to consider which market you are targeting or in which niche you want to position yourself. Do you want to reach the mass consumer and profit from turnover, or are you looking for more segmented markets and more solvent buyers? Or maybe you aim for something more balanced – to offer relatively good quality at average prices for the market.
- Contingent own remuneration
A “favorite” mistake of many entrepreneurs. Not only at the beginning of the business, but also at a later stage, this unexpected expense can turn out to be quite a stumbling block. If you do not include it in advance in the expense part, you form an unrealistic expense related to your remuneration and insurance in the company.
Tip: Determine your salary to get a more accurate idea of expected expenses. In this way, you will avoid the illusion of higher profitability of your business and you will get more accurate results for future expenses. Do you want to fix your salary? Think about it and research what it would be like if you were on an employment contract in a similar position.
Starting a new business is an activity that needs innovative business acumen. Whatever the development of your venture, you will certainly gain invaluable experience and a chance to test and develop your idea. The implementation process is in itself an opportunity to learn a lot about entrepreneurship. Do not give up on your project, because you have a real chance to reap good results.
