Avoid these pitfalls in the business formation process

Small businesses are an important part of the economy in Massachusetts. However, entrepreneurs who are willing to take the jump into small business ownership should do so carefully, to ensure their business will be successful.

First, people should not assume that just because they have a great idea for a business, that it is all they need to make it successful. Running a small business is not easy — it takes a good work ethic. Before opening their doors to the public, small business owners need to plan all aspects of their business, including the “what-ifs.” Without first specifying the details of their business operation, their business may have a hard time successfully launching.

Second, there are a lot of legal and tax requirements that come with starting a small business. To ensure no crucial step is overlooked, it is important to retain an attorney and an accountant. After all, if a small business owner fails to file the proper documents, he or she could really end up in hot water.

Also, entrepreneurs who have secured the capital to start their business should be careful when spending it. They need to invest enough to get their business started, but they also do not want to spend too much without first ascertaining exactly what their business needs are. It might help to first get feedback from patrons and have their business experience some success before deciding to grow their business.

In addition, many entrepreneurs may be tempted to work their nine-to-five job and launch their small business at the same time. However, it takes a lot of work to start a business, and a person who is still employed elsewhere might not have the time needed to successfully start their business. It is better to wait until you’re in a position where you can give it your all.

Finally, when it comes to running a small business, it should be the owner who is in charge, not another person. If a person has a partner, then they should devise a plan that unequivocally lays out what responsibilities each partner will have.

These are only some pitfalls to watch out for during the business formation process. Entrepreneurs who want to see business success may want to consult with an attorney who can help them establish their business from the ground up.

Source: Entrepreneur, “The Top 5 Mistakes People Make When Start a Business,” Robert Tuchman, July 29, 2014