Biggest Start-Up Mistakes to Avoid

Don't let these common mistakes destroy your chances at having a successful start-up.

By Karen E. Spaeder

Opinions expressed by Entrepreneur contributors are their own.

Q: I have two questions to ask for my business management class. What common mistakes do new entrepreneurs make? And what advice would you give to start-ups?

A: I'm going to spend a lot of time addressing your first question here without directly addressing the second one, because by outlining the common mistakes, I'm providing advice to start-ups--that is, don't make these mistakes.

If you think about the idea of entrepreneurship, just the concept alone, you'd wonder why all of us don't quit our jobs and start a business. You answer only to yourself, and you have the freedom to be as successful as you'd like--you can either stay small or expand your business as you become more established.

There's a reason why everyone doesn't quit their jobs, however. Several reasons, as a matter of fact. And usually those reasons have something to do with the very reasons for starting a business in the first place. That is, when you answer only to yourself and control your own destiny, you have to be proactive about doing whatever it takes to run a successful business, even if that means two hours of sleep a night and living on instant soup.

That's why so many of us stick with being the employee in the equation. That's why those of you who aren't content in that role choose to start a business. And that's why many of you make mistakes during start-up that haunt you later.

One of the most common mistakes of start-up is underestimating the amount of money and time it takes to start a business. The money part is tricky, but it doesn't have to be a puzzle. That's what business plans are for. Done right, the business plan helps you determine what you are doing, how you'll do it and how much it'll cost to do what you want to do.'s Introduction to Business Plans is a good place to start; you can also try some of the available business plan software, like Business PlanPro 2003. Without that business plan, you might not account for every detail, and you might wind up undercapitalized--and out of business.

As far as the time commitment, of course it'll depend on the type of business you're starting and whether you plan to start the business full time or on the side. For example, if you want to start a part-time business selling jewelry on eBay--jewelry that you already make for fun--that's a far different story from someone who wants to start a restaurant and has to devote the time to finding start-up capital, employees, a location and equipment. But large or small, a business tends to consume time, and large chunks of it, so be prepared to handle that reality.

Another big mistake is failing to enlist professionals who can walk you through start-up. There are certain things you might be able to figure out on your own--marketing materials, for instance--by reading good books and articles, but you don't want to mess around with things like figuring out how to structure your company (sole proprietorship, corporation, etc.), what licenses and permits to get and so on. Even if you get just a little input from an attorney and an accountant, you're probably better off than if you attempt to think of every legal and tax question in the book.

When you read them on paper, these mistakes might seem obvious, and you might be thinking that you're far too savvy to make them. The truth is, you are very savvy--but unless you proceed slowly and carefully, taking the time to do plenty of research before starting a business, even the savviest among you will run into problems.

The opinions expressed in this column are those of the author, not of All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

Karen E. Spaeder

Karen E. Spaeder is a freelance business writer in Southern California.

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