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9 Mistakes When Starting A Business

You wrestled with yourself for a long time, but now the decision has been made: You are going to start a company. But no sooner have you happily shared this decision with your family and friends than there is already good advice hailing: "Remember ...", "Don't forget ...", "Why don't you ...". And slowly you realize that there are many things that you should and should think about when planning a start-up.
However, you can be helped. With our experience, we have formulated our “Top 10” founding errors. We will briefly outline these below. Over the next few weeks, we will address each of these ten sources of error, describe them and give you tips on how to avoid them. And here it is - our top 10 mistakes to make when starting a business:

Mistakes When Starting A Business

9 Mistakes When Starting A Business

1. Insufficient preparation

The Internet in particular suggests that starting a business is the easiest thing in the world - you do that on the side. So why spend a lot of time planning? Yes, starting a company can be easy under certain circumstances. Most of the time - and that is the nasty thing - the problems that had to be solved in advance are not described.
Maybe because the person who made the mistake is ashamed or because it has been suppressed or because it is not even noticeable at the moment. And so the “thing of founding” becomes a complicated thing that costs more money and time than planned.

2. Overstrain at the start

The company has been founded, the entry in the commercial register has been made, now we can start. But then the mail piles up: tax office, trade office, IHK, the strange letter from the "trade register". And suddenly you have to do bookkeeping, the website is not running, the goods are not delivered on time and the lease for the office is still not ready. Grace - none of them.

3. Unrealistic self-assessment

Running a company is easy - accounting: a breeze, taxes: free, order processing: easy. But in fact, many future entrepreneurs lack basic knowledge, for example when it comes to sales tax, generating income, dealing with the tax office and filing tax returns. What seemed so easy at the beginning quickly turns out to be a major hurdle.

4. Insufficient commercial knowledge

One positive trait of entrepreneurs is that they are naturally always optimistic. Of course, this also applies to the amount of income that can be generated or to the costs that will arise. The reality then looks a little different.
Fixed costs, variable costs, cost-income ratio, profit - before and after taxes, taxes on income. There are many topics that suddenly become important. And they become very important very quickly!

5. Overestimated returns

We see it again and again: The future company always makes good profits during the first consultations. But once the company is set up, the picture suddenly looks completely different.
Because suddenly things break that in theory last almost endlessly, things are bought that are not suitable for the intended purpose and the seller is suddenly nowhere to be found and - the worst thing - the sales do not go as expected.
The result is unplanned expenses with lower than planned sales. Then add an initial capital calculation, which was overly optimistic, and the disaster is perfect.

6. Thin financial ceiling

Another point that we keep discussing with clients is the capital required. Of course, it is always a problem at the beginning to raise the share capital for a GmbH (this is 25,000 euros and you can set up the company with a deposit of half, i.e. 12,500 euros). Therefore, of course, the entrepreneurial company is better (this can theoretically be founded without capital).
But then how should you pay for purchases? How are goods bought? And how should the bills of the notary, the commercial register, the lawyer be paid? A buffer in financial planning makes sense - but then you need more money.

7. Underestimating time and complexity

There is a beautiful saying in English: "Everything takes longer than you think" - everything takes longer than originally assumed. And there is some truth to it.
Because suddenly the Chamber of Industry and Commerce reports because the company name is not permitted, the notary criticizes something in the articles of association and the landlord wants a commercial register number, although the company is not yet entered in the commercial register - and without this number he does not conclude the rental agreement.

A start-up is - despite many different statements on the Internet - always associated with imponderables. If you are prepared for it, then you stay cool if something happens that wasn't actually planned.

8. Wrong location

Having your own office is cool - no question about it. And of course, having a high-tech warehouse is impressive. And the office is best located in Berlin-Mitte, because then “you made it”. Yes everything allright. But why do you suddenly pay so much trade tax?
And why does it take so long to get to the office in the morning? And the planned employees, because of which the larger office was taken, are not starting to work in the new company. The location of the company has many effects. Good planning protects against later surprises.

9. Lots of lazy compromises

If you do reach a compromise to solve a problem, then another question arises: does the compromise help you further? Unfortunately, we observe that the art of reaching a meaningful compromise is often not mastered. This can have many causes. Sometimes founders don't even know exactly what they want.
If we ask questions, the answers come vague. In this way, however, one cannot even decide what the alternatives are. Sometimes the consequences of a decision are not understood. You accept an alternative that actually only looks good at first.
And of course there is also the classic: Many compromises are made, because something happens quickly rather than there being no activity at all. The fact that the ground is being prepared for failure here doesn't really need to be mentioned. But because it happens so often, we mention it anyway.