Lots of people dream of ending the shackles of their 9-5 job to brave it on their own.
Undoubtedly, starting your own business has its own attractive benefits - who wouldn’t want to be their own boss? Make their own schedule? Or even fix their own income?
The convenience and flexibility that comes with business owners pursuing their passion and earning a wage in happiness has, in recent times, led to an influx of new businesses. It’s obvious that more people are considering starting their own entrepreneurial path.
But long gone are the days when unique products and warm smiles were enough to make a company thrive. Regardless of the industry you’re in, it’s likely that you are going to be riddled with failures as you encounter trial and error.
Business owners are faced with many inherent risks. It’s estimated that 70 percent of businesses fail within the first 18 months. There are some lessons that will be learned the hard way, and there are a few common mistakes that new entrepreneurs often make that should be avoided.
If you’re starting a new business in 2016, I urge you to embrace your passion — this will fuel your success.
Remember, there’s value in learning from your own and other people’s mistakes. Always think decisions through to avoid financial and operational ruin.
Here are the 5 most common pitfalls to avoid if you want to jumpstart your business to success in 2016:
1. Having a “Build It And They Will Come” Attitude
Having a unique product or service is incredible, but don’t sit back and expect customers to make sprints into your store or website to buy from you. You still have to market yourself through proper business branding, networking and marketing of your products.
2. Not First Checking To See If You’re Legally Permitted To Use Your Business Name
Using another company’s trademark is an outright infringement that can put you in the red. Avoid using a business name on your social media, business cards, and other marketing material before verifying if it exists.
To be sure your business name is not registered already, you can perform a quick search online to check the business names registered by the Secretary of State for your specific state. You can also carry out a trademark search to ensure your name does not exist in all the 50 states.
3. Choosing The Wrong Business Structure When Registering Your Business
The type of business structure you choose will affect various aspects of your business including how much you pay for your business taxes.
Even though a sole proprietorship is less involving in terms of formality and administrative work, starting a Limited Liability Company (LLC) or a Corporation will help safeguard your personal assets from any company liability.
4. Wrongfully Using Your Independent Contractors As Employees
Independent contractors and freelancers are a common choice for most startup businesses with workforce needs.
However, independent contractors should not be treated as employees, and as such, there are specific payroll taxes as well as state and federal employment laws that are not applicable to them.
When seeking the services of an independent contractor, you’ll want to ensure that the government agencies indeed see them as independent business workers, and not as employees disguised under a different name.
There are severe repercussions with significant penalties if independent contractors are incorrectly classified. Avoid trouble by adhering to regulations concerning the hiring of independent contractors as well as the contracts used to lay down the terms of the relationship.
5. Not Having A Written Business Plan In Place Before You Begin Building Your Business
It’s said that not having a plan is planning to fail. Indeed, creating a business without any roadmap will get you nowhere close to success.
You have to put down in writing your goals and objectives and formulate a well-thought out strategy of how to get there.
Always remember to exercise self-control to avoid the above common mistakes. This does not mean that you forfeit the fun and excitement of your entrepreneurship adventure. Patience and passion are basic building blocks.
Yes, that enthusiasm is a fiery desire that will set you up for success, but it can also cloud your judgment if you are not careful.
Mollaei Law is a law firm specializing in business law serving businesses and entrepreneurs. We provide legal expertise in all stages of business development by drafting and reviewing contracts, assisting transactions, forming LLCs and Corporations, and registering trademarks and copyrights.
Image credit: Tom Woodward | Flickr