More than half a million new startup businesses launch in the United States each year. Yet more than half of the new businesses that open their doors annually won’t survive to the five-year mark. These six mistakes represent a big part of what stands in the way of a new startup company’s success.
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Spending too much too soon
Spending too much may mean taking out more loans than a new startup can repay or spending on bells and whistles when basics will do. It could also mean that the business is spending too much on production when there are more efficient ways of running the business. Either way, spending too freely can result in a cash-strapped company that is forced to close its doors.
Not consulting an attorney first
Not consulting an attorney can create a nearly unending series of problems for a new startup as it grows. An attorney with business startup expertise can advise entrepreneurs on everything from business structure to workplace liability, benefits packages and tax returns. It’s important to work with the experts at Carter West to avoid major legal mistakes with your new business.
Launching without a business plan
Every single business, no matter how much of a “sure thing” the new owners think it is, needs a business plan. This is because the business plan explains how to turn that sure thing into a sure success, and how to address any obstacles that may arise on the journey.
Pricing too high or too low for your market
Pricing “just right” for the market is absolutely essential to ensure customers will give a new startup a chance. Market surveys take a look at competitor pricing and help to position the new startup in a “sweet spot” in the marketplace.
Hiring too many or the wrong folks
Any entrepreneur will be required to juggle many roles. But hiring the wrong folks to handle the rest can hamstring a startup from day one. The same holds true for hiring more employees than payroll can reasonably handle.
Assuming profits will flow from opening day
Profitability is the universal measure of success, so of course all startups strive for it right from the first day. But the reality is that building profitability can take a year or more, and patience and persistence are both required.
These six mistakes are the reason why many promising new startups fail to realize their potential in today’s competitive global marketplace. By seeking legal counsel early in the process and planning for how to address each of these common mistakes, a new startup can protect its future and plan for its own success.