Top 5 Business Start-up Mistakes to Avoid
The founding of a business is often a dream come true, but at the same time, entrepreneurs are responsible for all aspects of their own business from day one. Nearly half of all business founders throw in the towel within the first six years. To make sure you are not one of them, we share the five most common mistakes made by newly self-employed people and what you can do to avoid them.
Mistake #1: Great Dependency on a Client
When you start your own business, you usually only have a few clients. However, the less customers you have, the greater your existential risk. No client should account for 50 percent or more of your revenue. Because if the client's business does not go well, you as an external service provider will be the first to have your contract terminated. Additionally, it weakens your negotiating position when clients find out how important the contract is for you as a founder.
Mistake #2: Estimating Prices Instead of Calculating
When it comes to money, the fun literally stops. Vague guesses and estimates are very dangerous when pricing your service. Because if the bottom line is not right, your self-employment is doomed to fail. In general, many factors influence a price calculation - being as cheap as possible should not be one of them. Do the math and consider the numerous costs that are part of the everyday life of being self-employed:
- Health insurance
- Retirement insurance
- Reserves for difficult times
- Maintenance costs (office, internet)
- Advertising costs
- Personnel costs
- Travel expenses
- Tax prepayments
- Insurance (disability, Professional Indemnity Insurance)
- Private income (your own “salary”)
Mistake #3: Overestimating your Accounting Skills
That little bit of bookkeeping will take care of itself? Not even close! The fact that accountants have completed several years of training is not for nothing - it is necessary to do a good job. When creating invoices, archiving receipts, etc., great care is required to avoid accidentally being targeted by the tax authorities. If, in the weeks leading up to the annual closing, you want to do more than just bookkeeping, you should consider hiring an external accountant or tax advisor. They will also know how you can write off the company car and other business expenses.
K2Match advises start-ups and founders internationally on topics such as brand entry, financing or business set-up. In this article, the two managing directors talked to us about what founders should consider when starting their own business: Tips for the Self-employed and Startups
Mistake #4: Underestimating the Risks of Your Own Homepage
A business without a homepage is rarely successful, and creating one's own web presence is also becoming steadily easier. Especially since Wordpress, Wix, Joomla and others offer easy-to-understand building block systems. However, self-employed people are solely responsible for the content of their own website. This means that they are the contact person for all liability risks, such as violations of image rights, errors in the imprint or a missing data protection declaration.
In this video, we have summarized the top 5 infringements and how you can avoid them:
Mistake #5: Forgetting about Business Protection
Young companies in particular can easily get into trouble with claims for damages or written warnings, for example due to legal infringements (copyright, DSGVO, trademark law). If so, your newly founded company may run into financial difficulties straight away.
Did you know that you can comprehensively cover these risks, as well as the ones belonging to your own homepage and all liability risks arising in connection with your work, with Professional Indemnity Insurance through exali.com? Thanks to our online calculator, concluding the policy is particularly quick and easy, which means you can be insured within a few minutes. In addition, exali usually offers a special discount of 15 percent on the insurance premium for founders in the first two years.
If you have any questions about the ideal protection for your company, do not hesitate to contact our insurance experts. You can reach them at +49 (0) 821 / 80 99 46 – 0 (business hours: Monday to Friday 9 a.m. to 6 p.m. (CET) or via our contact form.
With over 10 years of professional experience in online marketing at various platforms and online stores, project manager Kathrin Bayer provides valuable tips that go beyond current trends.
When she writes articles for exali, they mostly revolve around SEO or SEA risks, e-commerce and online trade or the media industry. She is on fire for all online marketing areas, combining experience with curiosity.