5 Common Mistakes Rookies Make
Understand what they are and how to avoid them.
While every new business venture starts amid high hopes and great expectations, many struggle or even fail — often because of basic errors that could have been avoided or missteps that could have been mitigated. Here’s a look at some common rookie mistakes as you launch a new legal or accounting practice, along with ways to sidestep them.
- Lack of market research
You and your new partners have the skills and work ethic to succeed. But you need to conduct research to determine whether demand aligns with your ambitions. What client base will you target? What does the competition look like? Why will prospective clients choose to work with you? What is the growth potential for your intended market? Insights into these areas may help you evaluate your potential for success.
- Neglecting cash flow
Even if clients flock to your door from day one, there’s always a lag between providing services and getting paid. You need to keep the lights on, buy equipment, pay your staff and meet your own living expenses. Cash flow problems have sunk more than a few startups, so think about where operating money will come from and whether a line of credit or other financial option makes sense.
Resist the temptation to grab business at whatever price clients are willing to pay. It’s easier to charge more now than raise prices later. You have your own costs to meet, and, in the end, your most satisfying clients will be the ones who value your skills and trust your judgment — and are willing to pay for both.
- Being inflexible
Even if you’ve done careful research, your business plan needs to be adaptable to changing market conditions. Build in flexibility so that you can leverage new opportunities and weather unexpected challenges. Better to retool on the fly than adhere to a vision that no longer works.
- Not considering the ‘why’
Though running your own practice can be immensely rewarding, entrepreneurship presents challenges that have little to do with law or accounting. If your main interest is earning a living, then you might be happier at an established firm. In other words, ask yourself why you’re starting the business.
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