The process of starting up a brand new business can be quite daunting, especially if you are a new entrepreneur. You have likely heard that most small businesses fail within their first three years of operation. You can make your business much more likely to succeed by avoiding some of these common mistakes during the business formation process:
- Not getting legal advice right away: As soon as you decide you are going to launch a company, you should get legal assistance. Attorneys are highly knowledgeable about all the paperwork you need to fill out, the financial liability you will have with different business structures and the tax-related issues you need to account for, among other issues. A business attorney will be an invaluable assistance to you as you work to get your company off the ground.
- Not completing important business-related documents: There are certain pieces of business-related paperwork you need to fill out and file with the proper government agencies. Your attorney can help you in this process. You should also make sure the forms are signed, dated, copied and initialed by all parties required for every transaction or document.
- Not securing enough capital: You can’t run a business without money. There are some businesses that will require more capital than others to get off the ground, but in most cases, a lack of money will be the main cause of failure. You should make sure you have a solid plan in place for raising the sufficient capital to launch your company.
- Not planning for failure: Every new entrepreneur has big dreams for his or her business, but it is an unavoidable fact that something will, at some point, go wrong. You must be able to stay flexible as a business and navigate the difficult times. This means having contingency plans in place, especially when money becomes tight.
- Not performing enough market research: You could have an extremely thorough knowledge of your industry but still fail as a company simply because you don’t know your market well enough. You have to know a) whether people will actually pay for your specific product or service and b) how you can connect with the people who will. Get to know your target customers, what makes them tick and how they will respond to what you have to offer them.
- Trying to do everything by yourself: You are only one person. Even if you fully devote yourself to your business, you’ll need some extra help to make sure your company will be successful. Beyond working with an attorney, this means having an accountant or banker with whom you have a working relationship, and having at least one other person you can count on to help you out with business-related tasks. This doesn’t have to be someone you’re good friends with or related to, and in many cases should not be.
For more information about what to do (and what not to do) when starting a new business to set yourself up for success, contact a trusted corporate planning attorney in the U.S. Virgin Islands.
Steven K. Hardy is an Associate Attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.