Starting a business is a thrilling endeavor and a time when new opportunities abound on the horizon. During the startup process, new and seasoned entrepreneurs can make mistakes without even realizing it. To learn about common business startup mistakes and how to safeguard against them, contact the dedicated and experienced California business attorneys at Von Rock Law at 866-720-0195.
Mistake #1 – Not Creating a Business Plan
The first common business start up mistake is not creating a business plan before starting the business. As the United States Small Business Administration explains, a business plan is the foundation of any business. It guides the founders through establishing, grounding, and growing the business.
Having a business plan can also open doors. Investors and other lending institutions want to feel confident in a company before contributing capital to help finance it. A business plan can demonstrate to investors that the owner is serious about the company and has done adequate research and planning.
Mistake #2 – Launching the Business Without Performing Market Research
Market research helps entrepreneurs evaluate whether their business idea is likely to succeed. It also informs them of the risks and benefits of entering a particular industry or niche. Ultimately, this research also provides a roadmap for what efforts have succeeded, what have not, and, most importantly, why.
Market research conveys vital information for any business, especially at the startup stage. Performing this in-depth analysis can help the founders understand where to invest their time and resources or if the business idea is unlikely to succeed long-term. In the zeal of starting their own business, many startups inadvertently skip this step or fail to devote sufficient time to performing market research.
Mistake #3 – Spending Money on Unnecessary Things
One of the exciting aspects of starting a business is purchasing new products and locating dedicated office space. Unfortunately, many startups can get carried away with this step and do not exercise prudence when buying or renting assets.
For example, pre-2020, many people may have thought that physical office space was necessary for the success of a business. With COVID-19 subsiding, however, many no longer share that opinion. For many business owners, renting expensive office space may be completely unnecessary.
Mistake #4 – Not Creating and Sticking to a Sound Business Budget
A sound financial plan is essential, and many business startups fail to commit to this critical component. Before beginning operations, entrepreneurs should prepare a financial plan that details at least a one-year projection for business expenses and income. The founders should review, adhere to, and update this plan regularly to help ensure the company’s survival.
Sometimes, taking out a loan may be in the company’s best interest. As part of the budget, owners can make sure that the loans are favorable to the business and are something the company can realistically pay off. Business debt can be a lifeline to help startups survive their first few years, but it can also create more burdens than benefits.
Mistake #5 – Not Developing Strong Branding or a Clear Braded Voice
Consumers typically want to understand and relate to a company before they invest. The connection does not have to be profound for the consumers to purchase a product or service, but customers are more likely to return to the business if they understand and identify with the brand or voice. While completing all the steps to establish the organization, the owners may not take the time to sufficiently develop and agree on the company’s brand and voice.
Consider meeting with an attorney to understand how to address and avoid common business startup mistakes. For more information, contact the experienced attorneys at Von Rock Law to help you protect all of your business and financial interests.
Mistake #6 – Failing to Properly Train New Employees
Failing to train new business members or employees properly is another common startup mistake. Small and startup business owners typically take on multiple roles when they run a company. When the time comes to invite outside help to work with the company, the owners may skip essential steps when taking on the new hire.
Another concern is that startups may forego writing employee handbooks or sufficient employment agreements. They may overlook this step or intentionally decide against creating these resources because of the time and money involved. Unfortunately, many business disputes stem from misunderstandings and miscommunication, which companies can often avoid if the owner takes the time to commit these details to writing.
Mistake # 7 – Not Having Internal Governing Documents
Internal governing documents are an essential feature of any business, regardless of how many managers, members, or shareholders there are. New and even seasoned business owners frequently forego this step because they see it as unnecessary. At the time, it may seem like everyone is on the same page, or maybe the owner is the sole manager of a California limited liability company and does not think they need an operating agreement.
In some circumstances, the person may not have issues if they do not have internal governing documents. In other cases, however, it opens them up to liability and a potential lawsuit if others question the business’s validity or the partnership’s terms. Having defined procedures for admitting new members, issuing stock, and other essential matters helps create stability and avoid potential disputes.
Mistake #8 – Not Writing and Updating Internal Procedure Manuals
Another startup mistake is failing to write and update internal procedure manuals and guides as the business grows. The entrepreneur may have written an early version when they began the company and did not go back and update the manual as they refined their methods. Not having these in place can create issues if other people need to understand how to run the business or complete processes.
Regardless of the reason for not updating the documents, entrepreneurs should regularly review and update procedural manuals and other internal guides throughout the lifecycle of the business. It provides clarity and continuity, helping ensure the company runs smoothly and consistently.
Final Mistake: Failing To Consider Contacting a Business Startup Lawyer for Help
Congratulations – starting a business is an exciting and busy time for entrepreneurs! As a new business owner, do not inadvertently forego necessary legal or financial steps or make common missteps when establishing your new venture. To learn about more common business startup mistakes and how to protect yourself against them, consider calling the experienced business law attorneys at Von Rock Law at 866-720-0195 to schedule a consultation.