Starting a new business always involves some measure of risk.

Start by conducting broad market research and determining where demand gaps and potential engagement points lie.

But steering clear of a few all-too-common slipups can boost your chances of success.

Here are six costly startup mistakes to know and avoid:

1. Launching Your Business Without a Plan

   A well-crafted business plan is like a roadmap for your new enterprise. You certainly can’t anticipate everything the journey will bring, but you’ll always have a sense of direction.

   Start by conducting broad market research and determining where demand gaps and potential engagement points lie. Then, consider how your firm will position itself – whether that’s with a better product or a unique delivery method. And don’t neglect the nitty-gritty, like what type of legal entity you’ll set up and how management will be structured. A solid plan isn’t just useful to you – it can also help you secure investments
   and loans.

2. Marketing on a Whim

   Early-stage entrepreneurs tend to be single-mindedly focused on product or service offerings. But a stellar business model needs stellar marketing – and that’s not something you can do on the fly.

   Even if you’re primarily a brick-and-mortar establishment, you’ll need to learn how to build a solid online presence. Find out what platforms your direct competition is using and formulate a plan for engaging prospective customers. Make a detailed marketing budget and refine it as you discover which approaches
   move the needle and which don’t. Regardless of platform or tactic, be sure to lead with your firm’s unique
   value position.

3. Overextending Your Reach

   In starting a business, it’s great to think big, but it’s equally vital to hone in on your target audience and take the time to understand their distinctive needs and expectations.

   You should be able to validate and quantify demand for your product or service through focused market research. Consider creating a fictional customer avatar that embodies the key characteristics of your chosen demographic. Envision your ultimate goal as establishing yourself as a trusted thought leader within a defined industry and region. Don’t be afraid of narrowing your possibilities – your horizons can always expand later.

4. Going It Alone

   Many entrepreneurs cultivate a lone wolf mentality – but don’t let independence become isolation. Among all the skills you hone, make sure that delegation is one of them.

   Learn to trust others with important tasks, especially when they have demonstrable experience in those matters. Especially when it comes to things like bookkeeping and taxes, it’s vital to seek out the best professional guidance. Apply the principle of comparative advantage, and empower everyone – including yourself – to do what they do best. When it comes to being the big boss, think effective oversight, not micromanagement.

5. Neglecting the Paperwork

   Few people – least of all business innovators – enjoy filling out forms. But a few misplaced documents could jeopardize your entire vision, so it pays to stay organized.

   Consult the U.S. Small Business Association (SBA) and your local county clerk for the necessary permits and licenses. If you’re forming an LLC or S-corporation, double-check your state’s filing and notice requirements. Find out what the banking and tax requirements are for your entity type – like whether you need to obtain an employer identification number (EIN). Also, don’t rely on handshake deals. Maintain written contracts with all
   your partners.

6. Mismanaging Your Money

   Raising capital might be your No. 1 mission right now, but careful oversight and stewardship of those funds are what will enable your venture to thrive over the long term.

   Create budgets that take into account your current financial resources as well as forecasted market conditions. Look into user-friendly accounting, payroll, and inventory management software. And give yourself a safety net, whether that’s an ample secured line of credit or a low-overhead passive income source. Remember that many promising ventures fail because they deplete their cash reserves.

Gear Up for Success

Launching a startup requires vision, resilience, and agility. The good news is that you can learn from both the triumphs and missteps of those who came before. Regularly review and refine your business plan, marketing plan, and budget to adapt to changing market dynamics and seize new opportunities.

Work With the Right Business Partner

For more personalized guidance about launching a new enterprise, consult your financial institution.

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