If you start your own business, improve your chances for success by avoiding these common pitfalls.
Lack of money. You’ll probably need capital to start your business, plus a cash reserve until your business becomes self-sufficient. Plan your cash needs carefully and realistically, and provide a generous cushion for setbacks and unexpected expenses.
Consider leasing equipment instead of buying. If you must buy, look into used equipment.
If your business is going to need a start-up bank loan or other financing, obtain the money before you make any major commitments.
People problems. Make sure that you’ll be able to hire and pay for the employees you need, especially if your business requires specialized skills.
Evaluate your own business skills honestly and objectively. Do you have both the financial and marketing skills that your business will need, or do you plan to hire someone who does?
If you plan to take partners into your business, take a very close look at your potential partners. Partners don’t have to be best friends, but they should like one another. Even more important, they should have mutual trust and respect for the contribution each will make to the business.
It is always a good idea to draw up a partnership agreement so that each partner can examine in advance the pros and cons of the partnership arrangement. Have your tax advisor and your legal advisor review the agreement before the document is signed.
Be sure to line up qualified accounting and legal advisors, as well as any other experts you may need. Good advisors can mean the difference between success and failure, especially in the early days of your business.
Insufficient planning. Research your industry and your competition in depth, and prepare a written business plan covering several years. Write a short mission statement for your company, identify your target market, and state your business plans as specifically as possible.
As always, should you have any questions or concerns regarding your tax situation please feel free to contact us.
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