- posted: Jun. 30, 2022
- Business Law
Some startup companies become successful businesses, but many more fail because they don’t take the steps necessary to put their companies on a workable basis or they take ill-advised actions that cost them dearly.
Here are some common mistakes that you should avoid if you are starting up a new business:
- Failing to make a feasible business plan — If you don’t start out knowing what you hope to achieve and instituting a viable plan for how to achieve it, your business is likely to flounder quickly. In addition to serving as a roadmap to keep the business on track, a good business plan can help boost the confidence of your lenders and investors.
- Misunderstanding your market — Startups are most successful when they fill a need not adequately served by current businesses. This doesn’t necessarily mean that you can’t offer a product or service to which your customer base doesn’t already have access, as long as it’s of sufficient quality to be competitive. You also need to price your product or service competitively and to encourage feedback from your customers for use in improving your business.
- Having inadequate capital to succeed — It may take considerable time for your business to become profitable. Until then, you need to line up enough capital to keep it going. Shrewd budgeting can help keep unnecessary costs down, so that you can put your money where it will do the most good.
- Inadequately protecting your personal assets — Startups are inherently risky, and you don’t want to lose your proverbial shirt because of business debts and possible lawsuits. You should make sure you have adequate insurance and consider organizing your company into a corporation or limited liability company that will protect your personal assets from current and future creditors if financial problems arise.
- Failing to make suitable contracts — Depending on the type and size of your business, you will likely need to work on a regular basis with some independent contractors, such as suppliers, advertising or marketing firms. You can avoid unnecessary problems with them by making written contracts that are clear, enforceable and adequately protective of your interests, preferably with the assistance of an experienced business contracts attorney.
Hemmer DeFrank Wessels, PLLC is a full-service business law firm in Kentucky that has advised many startups on business formation, contracts and other issues. Call us at [PHONE] or contact us online to schedule a consultation at our Fort Mitchell office.