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5 Mistakes to Avoid When Starting your Business. Launching a small business can be challenging, but it can also be very rewarding. Find out how you can avoid mistakes and launch an ever-growing venture.

Mistake #1: Starting a business without an entity

In most states, securing a business license or registration is required to operate a business, but this process is different from incorporating or organizing a company. Unless you register for limited liability corporation, or LCC, protection, the partners in the business can be held liable for anything bad that happens with relation to the business.

Imagine that Tom and Jerry, two longtime friends, have been speaking about their love of cheese. To secure the right type of cheese and due to scheduling conflicts, Tom and Jerry decide to start buying cheese from the farmers and distributing it to grocery stores.

That means that if someone gets food poisoning from the cheese Tom and Jerry sell, that sick person could sue for damages and come after Tom and Jerry’s personal assets, which they might think have nothing to do with their business. LLCs are, in almost all states, the most common form of registered entity due to their low cost and ease of operation.

5 Mistakes to avoid When starting your Business

Mistake #2: Miscalculating the time needed to launch

Since those former fitness club tenants had left their equipment, Mike and I figured that we could open quickly. It was already December and we believed we could open by January 1. Just in time for the New Year’s “resolution” crowd. Timing-wise, we thought we’d won the lottery.

But, three days prior to opening, we knew we were in trouble. I still can’t remember if we slept those last three days. We pushed hard to open the doors. And they opened, but not without our first suffering stress, tears, fears, panic, anxiety and delusions of the greatest business failure ever known to man.

So, set your own grand opening inside a buffer zone. Plan to be ready 10 days ahead of “the” day and you just might open on time, without dread and anxiety.

Mistake #3 Inadequate capitalization

Also known as “money,” capital is what partners, shareholders or business members contribute in exchange for ownership in the business. Some businesses are capital intensive — as in a dental practice — while others are capital-efficient — as in a copy editing company — but in every business, lack of money is the number one cause of failure.

5 Mistakes to avoid When starting your Business

Mistake #4 Planning only for success

Every entrepreneur dreams big dreams — and thank goodness — but sometimes things go awry. In order to be successful, a new business needs to remain flexible in its processes and develop easy-to-understand contingency plans in case the idea isn’t as big of a hit as expected. A line of credit from your bank, for example, need never be used but can be critical when you hit a bump in the road.

Mistake #5 Doing it all yourself

Having an accountant, banker and attorney with whom you’re on a first-name basis ensure you will build a strong foundation for your business and won’t make mistakes that will cost you more to fix down the line. 

More to Read:  25 Proven Ways to Make Money Fast

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