The Hidden Cost of Knowledge Gaps in New Businesses

I have spoken to quite a few people in the last couple of weeks because it’s the start of tax season. (Incidentally, these discussions are not really about taxes per se… and I don’t do taxes myself either!) Inevitably, this topic continues to bubble up repeatedly in our conversations: You don’t know what you don’t know.

Common blind spots for new businesses

This statement is true of so many people starting their own businesses. It appears to be a solid reflection of concerns that folks possess over bigger-picture issues of confidence in their own capabilities, knowledge, and skills. The meaning behind this phrase is important to understand because confidence often masks ignorance, often leading to costly consequences such as:

• Not knowing that sales tax applies to certain services
• Not understanding payroll filing deadlines
• Mixing personal and business funds “just for now”

Passion is powerful, but it’s not always enough

Indeed, many of us start businesses with a great idea or a true passion for what we’re doing: some of us possess special skills (tax, accounting, coaching). Some enjoy certain hobbies (baking, art, music), while others may crave the flexibility and freedom they seek from striking out on their own. There is nothing wrong with any of these noble motivations!

Regardless of the reason, millions of people start their business with high hopes only to realize that they don’t know the first thing about running a business: the various legal requirements to set it up, recordkeeping requirements, payroll regulations, paying taxes, etc.

Here are some notable examples of where a lack of knowledge collides with passions:

• Skilled professionals who underestimate what it takes to manage day-to-day operations
• Hobbyists who don’t anticipate or understand compliance, legal or tax requirements
• Freedom-seekers who don’t anticipate the need for a certain amount of structure and processes to keep things from slipping through the cracks

Hopefully, you get the idea. 

Experience isn’t necessarily enough

This was true for me in the beginning. Even though I probably possessed above-average knowledge of some of these concepts due to my business background, I still had a lot to learn when I started my QuickBooks-based bookkeeping (and education) practice.

For example, I was unaware that, even as a Sole Practitioner, I still needed to register my business with the county in which I lived (I was in Georgia at the time). When I moved to Florida nearly three years ago, I needed to file a DBA (doing business as) with the state.

Even today, I am still learning, and I am continually reminded that I still don't know what I don't know.

This is why this topic resonates so strongly with me, because I know that others are going through many of the same experiences that I have gone through. I want to be the type of resource for others I wish I had known about when I was first striking out on my own.

The cost of silent struggling

I came to realize that many of us have similar experiences and misconceptions starting out.

Specifically, we may think we know certain things, and we may think we’re on a good path. Somewhere along the way, we realize there are gaps in our knowledge. Note that these aren’t “advanced topics,” they’re foundational, yet rarely taught:

• Legal setup (business type, entity registrations)
• Financial literacy (recordkeeping, reporting)
• People compliance (payroll, contractors)
• Government expectations (taxes, filings)

It’s important to understand that this lack of foundational knowledge is NOT a failure, it’s merely information that we were never exposed to.

But here is where we may fall short: We often don’t ask for help when we’re stuck or run into trouble. We often want to just “power through,” not wanting to seem “stupid” or otherwise admit to others that we don’t know something. So, we flail around rudderless while the issues we’re dealing with become increasingly worse and the problems compound exponentially.

Asking for help is a strength

I’m here to tell you, there’s no shame in asking for help or in seeking the information you need to fill in those knowledge gaps. Seeking help is a strategic decision demonstrating a wise investment of one’s time and resources. It is also a form of risk management to help get ahead of any potential issues that may come up. If we frame it in this way, then we would most likely seek help more often.

It’s also important to remember that we are never too old to stop learning, and we should strive to learn something new each and every day. 

Questions that surface hidden gaps

When have you been putting off learning or getting help? What does that look like or feel like to you?

Here are some questions for self-reflection to help you get started:

• What question have you been avoiding?
• What tasks keep getting postponed?
• What would clarity give back to you?

Let’s hold each other accountable. Better yet, let’s not be ashamed to ask for help when we need it!

One great resource to start asking those questions is your local Chamber of Commerce. If they don’t know the answer, then they can point you to valuable resources that can help you with the specific issues you’re dealing with. So, add them to your speed dial and reach out to them when needed.

Getting guidance early can keep small uncertainties from turning into bigger problems. The hidden cost of knowledge gaps is rarely just one missed detail. It’s the time, stress, and rework that pile up when small issues are left unattended. Asking questions sooner and leaning on the right support can turn those unknowns into clear, manageable next steps.