Stop anyone you meet and ask “what’s the biggest mistake a new business owner can make?” Odds are they won’t know. A more insightful respondent (perhaps one who knows from personal experience) might mention “undercapitalization” or “lack of cash flow”. They’re usually right. But the truth is, the biggest mistake is usually not one but a combination of the following maladies: “being overly optimistic when projecting revenue”, “having a weak (or nonexistent) business plan”, “pricing problems”, “a failure to seek professional advice”, “rushing to market”, “insufficient experience”… the list goes on.
On the other hand, ask them what makes an entrepreneur succeed, and you should hear statements like “owner’s self-confidence”, ”emphasis on service (quality) rather than price”, “working hard”, ”luck”, “devoting full time to the business”, “industry expertise”, and “making a significant capital investment”…
The point is, to succeed, you need not only the desire, but a well-rounded understanding of the pros, the cons, and how to exploit or avoid them.
A prudent business owner does his homework by considering the possibilities mentioned earlier and determining, in advance of their occurrence, how to avoid the “pitfalls” and ensure success. One of the keys to success is turning to experts for professional advice.
If you make a practice of turning to objective professionals early on in the planning process, you’ll increase your likelihood of finding the avenues which will lead to your success. For example, a good banker can be very helpful in identifying credit needs, an insurance agent in identifying risks that need covering, an attorney concluding on the appropriate business form (sole proprietor, partnership, LLC and “C or S” corporations) and CPA can advise as to cash flow needs, accounts receivable control, tax planning direction and much, much more. Consider bringing your local banker, insurance agent, attorney and CPA on board sooner than later. By doing so what you will find is you can focus on what you do best – managing your business – knowing you’ve got a team working with you to handle matters outside your realm of expertise.
This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.
