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Potential pitfalls when starting a business.

Writer's picture: Ryan BonnerRyan Bonner

Today I want to digress slightly from my usual posts. I’ve been running Raspberry IT for three years now, and some of the choices I made when starting out have proven to be more costly as time goes on. Here are some of the lessons I’ve learned so you don’t repeat my mistakes:


Get the right advice


Even as an IT specialist, I should have sought advice from those who have gone before. Getting the right advice across many areas – Accounting, Legal, Insurance, even IT – would have saved me time and effort in the long run. I thought I could do things on the cheap – and I did to start with. But starting out cheap only ended up being more expensive in the long term.


Choose the right Domain Registrar


There are several domain registrars in New Zealand who offer cheap domain names. Almost all of these come with hidden costs. Things like DNS, Domain Security, and accidental expiry cover all cost extra. I now recommend an international registrar to my clients and will eventually swap my own domains over to them. They cost slightly more up front, but everything is included, and their support team do a great job when issues arise (compared to one NZ registrar who failed to respond to a query for over a week!).


Choose the right email service


Some Domain Registrars offer an email service. It makes sense to only deal with one company, right? Sadly, no. These email services are very basic, have limited storage and limited options. Their spam filtering is an unknown quantity, and their support is often lacking (as above). Many don’t support synchronizing of Contacts or Calendar, nor do they support DKIM email signing (see last week’s post on email security records). I’ve seen clients who couldn’t increase their mailbox limit from 5GB without paying nearly double. I’ve seen clients who were being blacklisted as spam for sending an email to seven recipients. I’ve seen clients whose email was down for three days because they were blacklisted as spam.

It makes even less sense if you have an Office 365 subscription. You may pay $5 per month for 5GB of emails and an additional $12 per month for Office 365. For $20.20+GST you can have a Microsoft 365 Business Standard subscription which includes the Office applications, 50GB of email, 1TB of cloud storage and an enterprise level spam filter.

Not a Microsoft fan? Google Workspace offers Google’s online productivity suite, as well as enterprise class Gmail, and Google Drive cloud storage, and is still a better option than using a Domain Registrar.


Choose the right accounting package


One of my biggest concerns when starting out was dealing with my tax obligations. So, I chose a package that advertises a hassle-free system (I’m not naming names for legal reasons). Over time I realised I was paying too much in tax, and I was having regular fights over what I could claim as an expense (even after seeking advice from an accountant). The over-taxing especially hurt my cashflow. That money does come back, but it means having to wait for the end of year tax return. I also discovered banks won’t accept the ‘financial reports’ this system provides when you apply for a business loan or credit card. I say ‘financial reports’ because what they produce is incredibly lacking. Had I sought and taken the advice of an accountant, I would have started out with a proper accounting system and had more control over my cashflow as a result.


Get the right legal advice


If you’re a starting a service-based business like I did, get advice around how to word your contracts. Having the right wording helps set the expectations for both you and your clients and can save you both from embarrassing or costly situations. If you’re selling products, make sure the products are legal within New Zealand (some products can only be sold through certain channels) and don’t breach any trademarks or copyrights. A lawyer can also give you advice regarding the Fair Trading Act and the Consumer Guarantees Act. If you know your obligations in advance, you’ll be prepared if and when something goes wrong.


Get the right insurance advice


In a service industry like IT, having Professional Indemnity Insurance is an absolute must. So I was surprised when I spoke to my broker and he marvelled that I was one of the few who had it. Things go wrong, I’m human, I make mistakes. I want to ensure both myself and my clients are covered if something goes wrong. In the same vein, having insurance for your work tools is invaluable. A builder friend of mine has had to make 5 claims in this year alone due to thefts and employee accidents. If he hadn’t had insurance, his business cashflow would be severely impacted.


Get the right IT advice


IT doesn’t have to be expensive, but buying the cheapest option can hurt in the long term. A cheap computer from a retail store may not have the capacity or the longevity you would expect. I’ve seen computers that were significantly slower than a slightly more expensive option. A few minutes waiting for a slow machine every day quickly adds up to hours of unproductive time over months and years.  I always recommend business grade computers to my clients. These machines have more robust components and often have longer warranties than their consumer grade counterparts. I’ll help you work to a budget and find the best computer for your business needs. I’ll also provide you with advice around domain names, business emails, appropriate applications, and will look at your IT related processes to help your business run efficiently.


Are you thinking of starting a new business, or just want some advice on your existing IT setup? Contact Raspberry IT today!


P.S. I can also recommend a good accountant, lawyer, and insurance broker 😊


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