5 mistakes to avoid when starting a business in Wales

For more and more entrepreneurs, starting a new business in Wales presents a cost-effective means of going from concept to full-scale production. Yet in order to reap the rewards and secure a prosperous future, creating an effective business plan that takes into account all of the pitfalls you can expect to encounter is essential. After all, only by undertaking the necessary preparations and knowing what to look out for can you hope to avoid costly mistakes. So if you’re thinking about starting a business in Wales, here are 5 mistakes you need to avoid.

1. Inadequate market research

One of the most common reasons for new businesses failing is a lack of sufficient market research. It’s a vital responsibility that enables you to ascertain the viability of your idea(s) and learn more about the market/customer demographic you’re targeting. Though it’s easy to assume that your idea is something that can be monetised, the question you need to be constantly asking yourself is ‘How can my business add more value to my customers?’ Are the goods and/or services you’re providing something they actually need or stand to benefit from? Or will it be a passing fad? Only by carrying out thorough research into your chosen market can you hope to predict how your target audience may react and decide whether this is a venture that’s worth exploring. After all, not all great ideas are money-making ideas.

Starting your own business in Wales? Need sourcing a suitable finance agreement? Apply for new business finance and learn more about how you could benefit.

2. Ineffective financial planning

If your business is to secure a lasting future in Wales, effective financial planning is an absolute must but is something that is all too often overlooked. However, without the necessary funds at your disposal, you’ll quickly discover that performing day-to-day tasks and consolidating a solid foundation for your business could be an uphill struggle. Besides, knowing your financial targets and how much you need to maintain your bottom line is a great way of determining how well your business is performing.

But as well as helping you to determine how your business needs can be structured financially, your financial plan should also outline your strategy for acquiring external funding as and when you need it. Naturally, exploring the traditional path may not yield a result on account of your limited trading history, but there are other ways of raising capital such as Grants, Crowdfunding and Peer-to-Peer Lending.

Yet as your business expands and enters its 2nd trading year, other sources of external funding may have become available, including those on offer through the Alternative Finance industry. However, this presents another challenge but is one that could be resolved by seeking the guidance and expertise of a qualified business finance professional.

3. Not watching your competitors

Another mistake to avoid is ignoring the activities of your competitors. Naturally, running your own business is going to consume most of your time, but you should take the opportunity to monitor them all the same. After all, they’re not going to ignore you. So, if you are to live up to the challenge they present and maintain a steady stream of customers demanding your goods and/or services, reviewing how you can stay one step ahead is essential. However, it’s not just about watching out for other businesses, you also need to keep up-to-date on the new technologies, goods and services which are being developed, keeping in mind how they may affect your business’ sustainability.

4. Weak inventory management

Plus, another costly mistake to avoid is not exercising sufficient control over your business’ inventory. If you’re not actively monitoring your inventory levels you may find yourself running out of vital supplies and stock, making you unable to produce certain goods and/or services. This could lead to disappointed customers leaving your business and heading to your competitors, resulting in a loss of potential income. To avoid this, frequently:

• Place orders for a fresh stock as soon as minimum levels are reached
• Carry out stock checks
• Coordinate deliveries so that they arrive as and when they’re needed to avoid a build of surplus stock

In addition, you may want to automate inventory management processes for greater efficiency and freeing up more of your time. Some of the inventory management systems that you could utilise in your business include Fishbowl, Agiliron and TRXio.

5. Lack of suitable skills

Finally, it’s important that you appreciate that the most important aspect of your business is, of course, your team. In order to grow effectively and run reliable day-to-day operations, hiring employees that possess the expertise and skill sets that your business requires is vital. That’s why you need to be regularly reviewing your recruitment processes to ensure tasks are delegated to suitable candidates. However, there are a variety of ways in which you can acquire the staff you need, which include:

• Recruiting permanent/part-time staff
• Fixed-term contracts employee
• Temporary contracts
• Freelancers
• Agency
• Contractors

Need help supporting your business?

Starting your own business in Wales isn’t a decision that should be taken lightly. It requires in-depth research, planning and a thorough understanding of the obstacles you may face. Yet in order to reinforce your position and muster the strength to push forward, having access to sufficient amounts of capital is a responsibility that cannot be overstated. But how? Fortunately, there are plenty of funding opportunities available which are dedicated to supporting new businesses in Wales. Plus, as you develop, the Alternative Finance industry could provide much-needed support as well - you just need to source a product that’s suitable for your business, which is where we can help.

At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking for a way to support your small business as it develops in Wales, apply for New Business Finance today or find out more with Rangewell.