How To Avoid Mistakes for Startup Businesses

By Rollyn H. Samp

After practicing business law for 40 years, I have observed the successes and failures of startup businesses…Some legal and other practical business observations.

 1.  Waiting until entrepreneurssee how it goes to properly form a legal entity; Corporation, Limited Liability Co. (LLC) or Limited Liability Partnership (LLP).

 Can cause personal liability exposure and other future legal problems.

 2.  Failing to put everything in writing; a violation of Samp’s adopted law:

“If you have a written agreement, you have a prayer.

If you have a verbal agreement, you have nothing but air!”

3.  High overhead eating up startup capital.  I have rarely seen fancy offices make much money for owners.  Becoming a slave to overhead means working for someone else such as lenders, landlords, employees, and investors, etc.

4.  Lack of capital.  I have yet to see a properly capitalized business fail.  Spending extra time to obtain capital is an investment in success.

5.  Selecting weird business names.  The best name says what the business does.  Otherwise, it costs valuable capital to explain what a business name means. Good for media but bad for bottom line.

6.  Failure to utilize intellectual property laws to protect good ideas.

7.  Failure to have well crafted non-disclosure agreements, (NDA’s) to protect trade secrets, customer lists, financial, etc.

8.  Failure to obtain adequate business insurance coverage. Let someone else share risk.

9.  Failure to write and update a simple business plan with real projections.  Forget platitudes and outline how to make a profit.

10.  Failure to listen.  A recent study showed successful business leaders never talk more than 15 percent of the time. Getting advice, feedback, questions are the golden nuggets to success in business.

May your return on investment (ROI) be bountiful.