You can find all kinds to deterrents to starting a business. In fact, there are five times as many articles on the mistakes you will make versus the great reasons to start a business. I am going to add to that mismatch with this quick blurb, however, I will point out that from a business perspective there is nothing more rewarding that starting your own business.
There are a handful of obvious mistakes to avoid and I will try and cover five of them below:
- Starting a business without a legal entity.
In many states, a business permit or some type of registration is required for a business to transact business; however, this procedure is unique in relation to legal forming an organization. For example, if you register a limited liability company, or LLC, the members in the business can avoid personal liability for anything (non-fraudulent) that occurs in operating the business.
- Doing everything yourself
Having a bookkeeper, CPA, banker, and yes even a lawyer with whom you’re on a first-name basis guarantees you a better chance of establishing your business. Additionally, you will be less prone in committing costly errors that could destroy the business down the line.
- Working with friends versus business partners
Oh, the joy of starting a business with your best friend. Just think, you will get to spend more time with them and you will both become wealthy, right? Simply put, don’t do it. Too many things can go wrong and then you have the age-old issue of people telling you “I told you so.” To be successful, business partners cannot be afraid of hurt feelings.
- Procrastinating the need for financing
Raising capital can be tedious, and if you hold up until the point that you truly require the cash, you might be compelled to agree to lending terms or equity partners that take advantage of you. Yes, they are out there and yes you will discover them if you wait until you are losing opportunity or in trouble.
- Under pricing your product or service
One of the most common mistakes made by newer businesses. Often this is the result of not understanding your real costs. If you don’t take the time to think through this and you are merely adhering to a pricing strategy based solely on what you think the market will bear, or what the competition is doing, you will ultimately fail.
Mr. Cox is Managing Principal with Pendleton Capital Group, Inc. – a factoring and trade financing company headquartered in Houston, TX. PCG provides professional “best practices” Factoring and Trade Financing and other small business services. His office is in Houston, TX, and he can be reached for additional information or consultation at firstname.lastname@example.org or 713-808-9746. The company’s website can be accessed at www.pendletoncapitalgroup.com