4 Mistakes To Avoid When Setting Up A New Business

Recent statistics from the Bureau of Labor Statistics indicate that 1 in 5 businesses fail in their first year of operation. The reasons for failure can range from poor cash flow, lack of research, bad partnerships, poor marketing, and not being proficient in the industry. Starting a new business isn’t a time for winging it and hoping for the best. It is a time when you need to put effort into planning and avoiding the typical marks of failure for small businesses.

You must avoid the following mistakes to get off on the right foot.

Not Making A Business Plan

If you don’t have a business plan, then how will you know if you’re going the right way of doing everything you need to make this venture a success? A business plan is your gateway to getting funding if required, giving you direction, and ensuring things are moving forward as needed. Neglecting to put one together, even a basic outline, is simply a recipe for disaster.

Not Registering your Business, 

If you want to land yourself in hot water with the government, then neglecting to register your business and get the appropriate paperwork will set you back massively. Before you start trading or looking into anything else, you need to register as the correct business entity and use a FEIN application service to get your Federal Employer ID Number registered with your local state and any other states you’ll be trading in and any other organizations are required for your industry, so you have a license to trade. Not doing all of this in the first instance can spell legal trouble and potential fines from $500 to $10,000 per year in Nevada, or penalties and will impact your success in that all-important first year.

Not Financially Planning

As we already mentioned, financial planning and cash flow significantly contribute to businesses failing in their first year. Misappropriating funds, not being aware of how much you will take or need to operate in the first year, or simply blowing funds you have on irrelevant purchases can impact your ability to push through lean times and support yourself as you get up and running. No one wants to end up being the next Fyre Festival, so make sure that all of your funding is set appropriately and you have money left over for your expenses, not a sad-looking cheese sandwich.

Not Getting Outside Help

Sure, you might be able to do it all on your own, but will you be able to do it well and know what to avoid for the best results or what to expect to help you pivot and reexamine your path? Probably not, unless this isn’t your first rodeo. Take any outside help you might be able to get your hands on. Be it from a business lawyer, mentor, financial advisor, or simply peers and connections in the industry. Heed their advice, forge your path, and keep your head screwed on with all of the information people are willing to share to help you make better decisions.

No one is telling you how to run your new venture, but these mistakes are pretty common and can seriously impact your ability to be successful. Take the advice, do your research, and spend appropriately to help you ensure things move in the right direction.