You’re eager to get your new business up and running, but before you officially launch, make sure you’re not making some common mistakes. In their haste, many entrepreneurs open their businesses before they’ve completed all the necessary planning. When you’re just getting started, you should pay attention to your structure and goals.
Not Having a Plan
You may have a great idea and the knowledge to make it a success, but if you don’t have a business plan, you could hurt yourself in the long run. You may act impulsively or fail to anticipate obstacles and opportunities you should have prepared for. A written business plan will serve as a blueprint that helps to guide your decision-making during that crucial first year and beyond.
Your business plan should define the scope of your products or services and map out a financial strategy, including financing sources and making a budget. You should conduct a market analysis, evaluate the competition, and craft your marketing techniques. Your business operations and structure should also be outlined.
Forming the Wrong Business Type
Choosing the wrong business type could expose you to risk and limit your opportunities. Your business structure will be directly linked to your finances and taxation. The right type will limit your taxation and protect your personal assets from liability.
The main types of businesses are sole proprietorship, partnership, limited liability company (LLC), and two kinds of corporations, C-corp and S-corp. A C-corp might be the best choice if you expect rapid growth and numerous employees. An S-corp will limit what kind of equity you can offer to employees.
Overlooking Legal Matters
Neglecting legal matters can leave you exposed to lawsuits and penalties. Your company will have to comply with numerous legal requirements, depending on the nature of your business. You may also need to draw up contracts for clients, vendors, and employees.
After forming your business, you will need to register the name with your state and obtain a federal taxpayer ID number. If you have employees, you will need to comply with labor laws. Hiring an attorney can ensure that you don’t overlook any important steps.
The day your business officially opens will be a cause for celebration. But your long-term success depends on avoiding common mistakes that entrepreneurs often make. Do your research, consult the experts, and put the right pieces in place.
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