Although starting a small business is a new exciting step for every new business owner, it can also be an overwhelming and stressful experience. New business owners face many new challengers in the first years of owning a business, and it is not surprising that many businesses fail during this initial period.

As a new entrepreneur, it is important to take a proactive approach to prevent the potential pitfalls to increase your chances of success. Aside from not knowing how taxation works, there are other common mistakes that can lead to failure of your small business.

Here are some of the most common pitfalls to avoid as a new business owner:

#1 Poor Planning Strategy

When starting a business, it is crucial to understand the importance of a business plan and how it can contribute to the success of your business. Without having one, you may just find yourself shooting blindly in the dark. It is essential to clearly establish your business' vision and mission. It is also important to establish a detailed analysis of specific aspects of your business, such as your financial map (this should contain your budget, employee salary and other expenses).

Due to the lack of proper planning and preparation, some small businesses eventually fail as early as the first few months.

#2 Inadequate Funds

One of the biggest financial mistakes you can make as a business owner, is establishing your business while not having adequate funding. Since a newly-opened business will not immediately bring in profit, money will be a necessity to support its daily operations. As a business owner, you will incur significant costs when paying for the necessary licenses and permits, equipment, supplies, employee salaries, and legal fees and taxes. Not having enough start-up funding is one of the most common reasons half of all start-up businesses fail in the first five years.

To ensure the success of your business, make sure that you have enough funds that can act as a support system when your business is at its weakest point. Thus, prior to starting your dream business, it is advisable to assess your needs and secure an adequate amount of cash that will be able to keep your business running until it's already providing you with stable ROI.

#3 Ineffective Marketing or Promotion

In today’s fast-paced market, it is essential to keep up with the competition to avoid failure. Thus, developing an effective marketing strategy is necessary to run a successful business. With the recent advances in technology and social media which provide effective marketing platforms, successful marketing campaigns can be launched even on a small budget. Creating a good marketing strategy will help your business reach its target audience and cater to your customers’ needs.

Starting a new business is full of surprises. As a new entrepreneur, it is important to be aware of the peaks and troughs of the process to increase your chances of success.

At Knox Taxation and Business Advisory, our team of experts offer small business mentoring services in Victoria to help you succeed in starting a business in Australia. At Knox Taxation and Business Advisory, we always make sure that our clients are in good hands.