Six mistakes to avoid when starting your business

As the old saying goes, you're better safe than sorry.

This proverb rings especially true in the professional world - where foresight is of the utmost importance - for small business owners and larger companies alike.

Starting a new business isn't a spur-of-the-moment decision. One wrong call or misstep can put your project's future in peril, affecting not only you but also your employees and clients.

To stack the odds in your favor, let's dive into the six common mistakes to avoid when starting out, ensuring you're well-prepared to compete in today's constantly evolving business landscape.

Deciding on your legal status is an early step in setting up a business. You can't kick off a business without a legal framework... This decision is vital as it impacts crucial elements of your business, including:

• your social security, the extent of your social charges;
• your tax framework;
• your bookkeeping duties;
• whether or not you can team up with others.

In France, legal structures range from sole proprietorship to micro-enterprises, EURL, SASU, SARL, SAS, and more. This can vary across Europe and throughout the world. How do you find your way - and more crucially - choose wisely?

Before anything else, you need a clear outline of your project. You should have a good grasp of crucial elements like:

• if you're going it alone or teaming up with other people;
• the scale of your future business (forecasted revenue, employee hiring...)
• how much capital you plan on overseeing (in the near and medium-term future)
• financial projections and the amount of money you wish to earn for yourself.

Don't worry - nothing's set in stone. You can always switch your legal status down the road. However, this isn't the best scenario as it involves logistics, paperwork, and extra costs. Say you want to move from an SARL to an SAS, for instance. You'd need to alter the company's statutes in this instance. This step, which comes at a cost, also requires unanimous partner approval. These demands can stir tension if stakeholders aren't on the same page...

So, as you'd guess, to sidestep issues, it's best to get it right from the start. When in doubt, reach out to an accountant or lawyer for tailored advice and to avoid blunders that could affect your work and relationships with clients.

Launching a business means tackling some admin tasks. Taking France as an example, to establish a company, there are five required steps to follow:

• writing legal statutes,
• securing a company address,
• funding the share capital,
• announcing incorporation in a Legal Journal (JAL),
• registering with the Guichet unique (Single Window).

We totally understand that this process might seem exhausting. Still, don't rush and make sure to follow the order. If you miss a step, your application could be denied, wasting precious time and potentially costing you a significant amount of money.

The one step that's always worth your time is drafting your company's statutes. These statutes govern how your business runs and partner interactions. Internet templates provide a good start but aren't always sufficient. They need to be customized for your specific project. Once more, consider getting a pro to review and add specific clauses to your document, especially if you plan on having employees or complex contracts with clients.

1. Discover our comprehensive guide to launching your business. We guide you through every step to get your company or solo venture up and running. As an added bonus, we've included a downloadable checklist to help you stay organized throughout the startup process.

For the best shot at success, dedicate time to planning your project. When developing new business ideas, this phase is never a waste of energy. Marketing strategy is key - it sets the groundwork for a long-term stable business. Not to mention it will help you win over those early investors and stand out from your competitors.

Initial excitement might make us think a great idea is all it takes for success. However, that's not true. Your idea needs to face economic realities to prove its viability to investors and potential clients.

A market study and business plan will shape your project's scope and feasibility. They might steer you to adjust your initial idea according to market conditions and opportunities, ensuring better communication with your target audience.

A business plan is especially handy since it contains a detailed financial forecast. It's vital to foresee expenses and avoid underestimating them, particularly when it comes to the amount of money needed for operations and growth.

Freelancing or self-employed? Contrary to what many think, a business plan isn't just for SMEs and big firms. Naturally, you should tailor it to your project's scale. Yet, it's crucial for outlining your positioning, offer, pricing, needs, and costs when pitching investors on your marketing strategy.

We frequently hear tales of entrepreneurs who launched with just pocket change at their disposal. Inspiring as these stories are, they don't always match the actual costs of running a business. Though digital tools and new models have lowered entry barriers, initial costs are inevitable for small business owners.

Just off the top of my head, we can easily identify:

• establishing the company’s address,
• potential legal/accounting help from a pro,
• pooling your capital,
• publishing a notice of incorporation,
• registration fees at the One-stop Shop.

Keep in mind these expenses apply when scaling a company, which isn't often the best way to start out. As we touched on above, new business ventures can avoid this when entrepreneurs simply start out as freelancers, before hiring people and expanding their operations.

These vary tremendously depending on your marketing strategy. Typical new business expenses include market study and business plan costs or intellectual property protection (trademark, patent).

The expenses tied to founding your activity vary based on business size and sector.

• equipment;
• stock;
• tools: business account, accounting software, communication tools, marketing;
• marketing budget;
• business insurance;
• first hires;
• and so on.

Entrepreneurs often face solitude, especially when launching solo. That's why building a network early in your entrepreneurial journey is beneficial. It helps combat isolation and provides valuable advice and feedback from peers. These insights help you learn quickly and avoid mistakes. Plus, you get a fresh, external perspective on your business and can potentially find new clients or partners.

How do you build a network when you're just starting out? You've got several options.

• Platforms like LinkedIn are great for expanding your network.
• Reach out to inspiring entrepreneurs without hesitation.
• Networking events and trade shows offer great chances to meet fellow entrepreneurs.
• Business networks like chambers of commerce and alumni associations meet to share opportunities.

Every industry has its quirks. So, know them beforehand to avoid missteps. Consider several aspects in this context.

• Required business insurance.
• Some sectors must have specific insurance, like liability insurance or tailored coverage. For instance, construction workers need a ten-year guarantee to comply fully.
• Following safety and hygiene standards

Depending on your field, you might need licenses, certificates, or prior approvals. People don't start out as experts, so don't worry if you might need specific training. Simply set time aside to research and take steps to ensure compliance. Non-compliant work could lead to fines, legal trouble, or even closing your business, which could severely impact your employees and clients.

A successful business' biggest mistakes often can be looked at in hindsight as key to their growth. Learning from these experiences and adapting your approach is crucial for long-term success in any competitive market.

Fast-track the important steps of setting up your business by getting started with Qonto. We cover all your company's setup formalities - drafting statutes, initial capital deposits, managing cash flow, legal announcement, and registration - from your first year and beyond. Our services are designed to support small business owners and larger companies alike, ensuring smooth operations and effective communication with clients and employees throughout your entrepreneurial journey.