The Mistakes People Almost Always Make When Starting a Business

This example uses a toy importer as the new business throughout, just because it is an easy business to picture, but strip away the word 'toys' and almost every mistake below applies to any new business, whether that is importing something else entirely, selling a service or making something by hand to sell online. The details change, the questions underneath them do not.

Say you decide that you are starting a business. Selling toys online, sourced from another country, sold here for a decent markup. Sounds easy, right?

Except that the second you say it out loud, someone starts to ask questions. What toys exactly? How are you getting them here? What will they cost you? What is your markup? Who else is already selling this stuff? And most people don't have great answers for any of it straight away. That says something about how many people charge into a new business on nothing but excitement and how many mistakes that sets them up for.

Here is what tends to go wrong, in case it saves you the same headache.

Mistake 1: Falling for the product before doing the maths

'I'm going to import toys' is not a business plan; it is just a nice idea. The real question is whether the numbers actually work. What does the toy cost from the supplier? What gets added on for shipping and duty? What do similar toys actually sell for once the platform has taken its cut? If there is nothing left over after all that, it doesn't matter how much you love the product - it's not a business.

Mistake 2: Not thinking through how the stuff actually gets there

It's easy to picture the online shop looking great before working out how a box of toys gets from a factory overseas (or in the UK for that matter) into your hands. Is there a supplier lined up yet or is the product sourced through somewhere like Alibaba or through an existing contact? How will it ship and how long will the wait be? Skip this bit and you're likely to find out the hard way that the product is not what you expected, after the stock has already been paid for.

Mistake 3: Forgetting the compliance stuff

This one is a biggie for toys (or anything for that matter). Anything sold to children in the UK has to meet safety standards and carry the right marking, UKCA and sometimes still CE. Anything with batteries, magnets or small parts gets even more scrutiny. It is so much cheaper to sort this out before ordering a container full of stock than after trading standards comes knocking.

Mistake 4: Not bothering to check who else is selling it

'What competition?' is a fair question, not an annoying one. A quick search for the toys in mind shows who is already in the market, what they are charging, how many reviews they have got. If three big sellers already sell the same or similar product with rock bottom prices, there needs to be something that makes the new shop different. That might be a gap in the market that nobody has spotted, better quality or just a brand that people connect with more (Barbie is a doll like any other doll but it's been selling forever). This is called a 'USP' (unique selling point) and nine times out of ten the businesses that succeed have one.

Mistake 5: Only thinking about cost, not cashflow

It is one thing to work out what a single toy costs. It is another to get a decent price from a supplier which usually means buying in bulk, paying upfront then waiting weeks for shipping and customs before anything is actually sold. That is real money sitting there doing nothing for a while. Knowing the markup is great. Knowing whether the cashflow can survive the wait matters more. Of course there is drop-shipping but that's a different model entirely.

Mistake 6: Going big before testing anything

Why order a huge shipment on a hunch when a small batch first would show what actually happens? A small trial order that sells out tells you more than any spreadsheet ever could and, if the product isn't what you expected, it costs a lot less to find out.

So where does that leave things

Not put off, just a bit more realistic. Before getting carried away with a shop name and a logo, it helps to actually answer the boring questions; what is being sold, how is it getting here, what does it really cost once everything is added up, who is the competition and can the cashflow handle the wait for the money to come back round.

It's worth spending a few weeks getting that right rather than a few months finding out it was wrong.

If you are weighing up a new business idea around Baildon, Shipley or anywhere in West Yorkshire, we are happy to sanity check the numbers with you before you commit to any stock or first steps.