Schedule a Consultation: 858.483.9200
Top Five Mistakes to Avoid When Starting Your New San Diego Business
Congratulations! You have made the decision to finally start your own San Diego business – maybe on your own or with some good friends or trusted colleagues. This is exciting, but of course, risky. We here at San Diego Corporate Law can help with the legalities. We want to help you succeed. Here is a quick list of the top five mistakes to avoid.
Mistake #1: Not Having a Market Niche to Exploit
A market niche to exploit can come in many forms. For example, a niche can be geographic. You want to open a retail shop and there is not a similar shop like yours within miles. Of course, you have to consider whether geography even matters any more. With the ease of e-commerce and having everything delivered, does it MATTER than there are no shops like yours within miles? This is just one example of making sure you have a viable market niche to exploit. While it is convenient to order things online, at the same time, many people do like shopping in physical stores.
Other niches included new and innovative products, new combinations of products and services, new customer services, new methods, and more.
Mistake #2: Not “Running the Numbers” Accurately
Having a successful business is about making a profit. One of the most common mistakes made by new business owners is not running the numbers accurately. Usually, this is overestimating the sales and income to be generated and under-estimating costs. Thus, in the lead-up to starting your new San Diego business, make sure you are using realistic estimates. It is best to use conservative estimates. If you think you will sell 100 units, make sure that your business can survive by selling only 50 units. Really test why you think you will sell 100 units. You have to be realistic about your costs, too.
Not running the numbers accurately can be compounded by two additional mistakes – overspending and underpricing. Sometimes the idea is that a lavish upscale shop or an expensive “launch party” is the key to success. Those are risky strategies for a new business without a deep reservoir of capital. Better to save the money to keep the business running. Conversely, some think that providing a steep discount at the beginning will generate customers and the prices can be raised to more reasonable levels later, which is also a risky strategy for new businesses. Price at the level necessary to make the “numbers” work. Here is a good article from Entrepreneur.com about cost, pricing, and overspending.
Mistake #3: Not Having an Effective Marketing Plan
Another top common mistake for new business owners is not having an effective marketing plan. Some have this idea that customers will just “find you” or that the new product or idea or service will just “sell itself.” This is a big mistake. You have to find your customers and bring the product, idea, or service to them.
Mistake #4: Not Forming a Business Entity Like a Corporation
It is important to form a San Diego corporation or other corporate entity. A skilled and experienced San Diego corporate attorney can help you choose the right form, can be your “incorporator” or “organizer,” and can handle the yearly corporate maintenance tasks. The good business reasons to form a corporation include:
- Shielding personal assets from being seized by business-related creditors
- Tax advantages such as expensing and pass-through
- Ease of transferring business
- Continuity of existence
- Prestige and marketing benefits being an “Inc.” or an “LLC”
- Establishing a business credit rating separate from your own personal credit
Mistake #5: Not Buying Insurance
Another common mistake is not buying insurance. It costs money, so many people think skipping the insurance is a way of cutting expenses. That is a mistake. The insurance protects against financial catastrophe if, for example, there is a slip and fall and someone is injured. Obviously, insurance is also essential for professionals to avoid the financial risks of malpractice.
Contact San Diego Corporate Law Today
If you would like more information about avoiding mistakes when starting your new San Diego business, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has been named a “Rising Star” for 2016 by SuperLawyers.com. Mr. Leonard has the experience to help you form a corporation (or any other corporate entity), including drafting custom bylaws, ownership agreements, and buy-sell agreements. A good business attorney like Mr. Leonard can give you some peace of mind knowing that the legal issues are handled properly. Mr. Leonard can be reached at (858) 483-9200 or via email.
You Might Also Like:
Forming A Corporation In San Diego
