You’re bound to make some business mistakes during the process of starting and running your business. But making the business mistakes on this list could spell disaster.
Lucky for you, not only are these mistakes easily avoidable, they can be remedied with the correct action.
So, let’s jump into a few business mistakes to avoid if you want to succeed.
Failing to Form a legal entity
This is #1 on our list because it’s the most important step in starting a business and one of the most common business mistakes. Forming an LLC/Corporation is important for a number of reasons:
LIABILITY PROTECTION— In our litigious society, establishing an LLC/corp to protect yourself just makes sense. When you form a legal entity for business, your personal assets are not at risk for the debts and liability of your business.
ASSET PROTECTION—It doesn’t take a catastrophic lawsuit to wipe out everything you own. Could you satisfy all your business obligations without tapping into personal reserves or losing personal assets? Entity formation takes this burden off your shoulders knowing that your personal assets cannot be targeted in the event of a business lawsuit.
TAX SAVINGS— There are a ton of tax benefits that come with entity formation. LLCs and corporations are entitled by law to many tax deductions not afforded to individuals. Additionally, the self-employment tax savings alone can amount to thousands of dollars saved every year.
Using Personal Credit to Get Business Loans
Most small businesses tend to be financed initially by personal savings or assets of the owner. But this puts you at serious risk of damaging your personal credit score. What you need to do instead, is build business credit.
Business credit is a track record of a business’s fiscal responsibility which companies, investors, or financial organizations use to determine whether that business is a suitable candidate for loans or a business partnership.
Here are more perks to building business credit:
-Protect your personal assets from business losses
-Limit your personal liability
-Eliminate the need for using personal credit
-Purchase vehicles without using personal guarantees
-Access more cash for the business
-Purchase items for business with convenience
-Prepare your business for future lending needs
Not Opening a Business Bank Account
Setting up a separate bank account for your company makes it easier to for you do business manage a cash balance, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. It also provides better protection if legal action is taken against your company.
Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.
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Skipping Market Research
Without a well-defined target market, your business with struggle to compete in a competitive battleground. It’s not enough to simply ask friends and family if your business idea is good. You need a broader, more diverse audience to chime in to see which demographic is most interested in what you’re selling. This way you can tailor marketing materials to speak to those people.
The best way to do this is with a business plan. When you create a business plan, you force yourself to do market research. Even better, your business plan can later be used to get funding.
Not Having a Website
This shouldn’t have to be on our list today, but even in the digital age we’re living in, there are still entrepreneurs operating without a website. And by website I don’t mean a flimsy Facebook page. You need your own domain name, you own branding and your own unique messaging to succeed.
And you don’t even have to hire an expensive web designer right away. With platforms like Wix, Weebly and Squarespace you can build your own customer website in just a few hours for as little as $15/month.
Instead of rushing to start your business, put in the legwork up front. This will make you more successful and more secure in the long run.
Don’t make the mistakes so many business owners make. Start your business the right and succeed.
If you’re ready to turn your dream business into a reality, look no further than Nevada Corporate Headquarters. From business entity formation to accounting and taxes, building business credit and estate planning, our comprehensive asset protection strategies are second to none and are proven to help businesses successfully launch and grow. Contact us today and go from business idea to open for business.