Many people have a great idea and hope to turn it into a viable business. What many people don’t know is how to build a sustainable business. Most small businesses fail within the first five years simply because they make mistakes when getting things off the ground. Here a few common mistakes that new business owners and entrepreneurs should avoid when trying to make their dream into a reality.
Underestimating Start-Up Costs
To have a successful business, one needs to have the correct supply and demand. They need to have cash available to manufacture, market, distribute and then pay all the people who helped make that happen. A lot of times, many new business owners start a new business because they are in need of cash – rather than having extra on hand. This sense of urgency for cash is what causes a lot of businesses to fail. In order to give your new company the best chance of launching and staying afloat is to have enough money in savings to pay your household bill for at least six months as a cushion.
No Marketing Strategy
You know you exist but does anyone else in the world exist? With so many different types of advertising and media options to select from, researching what will be the most effective for your new business venture cannot be ignored. Before you open your new business, a full marketing plan should be fleshed out and be ready to be implemented. This is why many people under-estimate start-up costs because properly marketing your new business is not cheap.
Spending Too Quickly
If you are fortunate enough to have an investor (whether it’s a bank or friend or relative), there is no reason to spend all of that money immediately when getting your business off the ground. My mother always told me to save half, spend half. The stuff you save can help you if you are in a jam with cash flow until profits start rolling in. If you spend it all immediately and there are no profits, you will be in a tough situation.
Being A Lone Wolf
It takes a village to raise a child and it takes a village to help get a business off the ground. Having a group of people that you trust to help make decisions on where to spend money and how to market your business will take all of this burden off of you. While this is still your company, your idea, your baby, etc having guidance from other successful entrepreneurs and professionals will help make sure you don’t close within the first five years.
Starting your own business isn’t easy. Not only do you need a plan that stands a good chance of working, but you might also need to find investors who believe in that plan. You’ll undoubtedly need to read and learn about all the laws associated with the industry and business in which you hope to join, and it’s a time-consuming process to say the least.
So what are the laws you most need to know about when starting a business? Here are the legal requirements every entrepreneur should know about!
First, you’ll need a name. That much is obvious, but you’ll also need to register the name with state and local governments. Be careful, because this doesn’t provide any legal trademark protection for your brand–you’ll have to do that on your own when the time is right. If you don’t complete this step, then your legal name will be automatically used.
Don’t forget to pay Uncle Sam! You’ll need to apply for an Employer Identification Number (or EIN) in order to identify your new business to the IRS. Individuals have social security numbers. Businesses have EINs.
Research state and local tax regulations for your business. If you will have employees working under you, then this is even more crucial because you’ll be required to contribute to the state unemployment pool.
Determine whether or not you need to be licensed or certified in order to perform any functions of the jobs or business you’re creating. If you know you need a state or local license, be sure to check to see whether or not that business is also regulated at the federal level. If it is, you’ll need to be certified there as well.
Small businesses and corporate empires must abide by almost all the same laws. You’ll need to know all about the laws that regulate how you can advertise and market, or finance your new business. You’ll also need to know about laws that regulate intellectual property (or IP) and privacy in order to protect yourself and your business from those who might be interested in stealing some part in it, or otherwise taking advantage or your newfound success. You may also be required to file reports or forms with agencies governing your industry, so make sure to perform the necessary checks now in order to avoid a headache later!
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