Simple Strategies that Can Improve Your Chances of Success
Successfully building a small business from scratch can be a daunting prospect. According to federal government statistics, about one in five new small businesses fail within 12 months and about half don’t make it five years. There are, unfortunately, some factors that contribute to this that cannot be controlled—markets change, products become obsolete or economic circumstances make viability difficult. But there are certain mistakes that often lead to the failure of a small business that can be minimized or avoided. Here are the most common ones.
- Failing to have a plan—Even the best new product on the market won’t sell itself. Too many entrepreneurs operate under the assumption that, if they simply get the product to market, sales will take care of themselves. A comprehensive business plan will help you proactively address most or all contingencies and stay on the right track. Effective planning also includes setting a reasonable salary, so that you don’t assume that you can simply spend anything that’s left over after you pay your bills. Unless you’re very lucky (and different from most other startups), you can expect some ups and downs during the first few months or years. Paying yourself a fixed salary means you put some of your excess profits away to help you get through lean times that may arise at a later date.
- Choosing the wrong legal structure—Filing articles of incorporation or setting up a limited liability company can seem cost-prohibitive in the early days of a commercial venture, but the protections afforded by these legal forms far outweigh the costs.
- Failing to maintain separation between personal and business matters—If you don’t keep a clear line between business and personal assets, your creditors may have access to your personal net worth to collect on a judgment
- Failing to carry enough insurance—This is another one of those expenses that may seem unaffordable when you’re just starting out, but which you absolutely must have. Whether you have to use it or not, it will provide peace of mind that problems with a vendor or customer won’t bring your entire enterprise to a screeching halt.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide comprehensive legal counsel to businesses and business owners. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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