Boise, Idaho is home to a number of thriving businesses in a variety of industries. Even though Boise has a business-friendly climate, it’s important to do your due diligence before venturing out on your entrepreneurial journey.
One of the most important aspects of forming a business is to consult with an attorney. Our firm, Generations Law Group provides counsel for businesses for everything from business formation and transactions to succession strategies and litigation.
Forming a business is a risky move but when you avoid common pitfalls, you can minimize some of your risk. Most people starting businesses pour everything they have into their dream — including their savings and retirement, along with thousands of unpaid labor hours developing proprietary services or products.
If you have entrepreneurship on your mind, we strongly encourage you to avoid these eight common business formation mistakes.
Top 8 Business Formation Mistakes
#1 Inadequate Planning
A business plan isn’t just a tool to get you a loan from a bank. Business plans should help you set tangible short-term and long-term goals, anticipate potential problems, and develop reasonable budgets.
Drafting a business plan might be an arduous task, but every minute spent writing one is well worth it.
You don’t have to do it alone, either. There’s plenty of resources to help get you on your way. From local universities to the Small Business Administration, soliciting help from experts can make a world of difference.
#2 Failing to Research
Your research will shape the course of your business. Researching the demand for your product, industry standards for services and rates, and understanding how your competition operates could make or break your business.
The quality of your research can also help you avoid mistakes that could make your dreams go up in smoke.
#3 Not Forming a Legal Entity
A legal entity offers business owners protection from debts and lawsuits.
Forming a legal entity isn’t always as simple as filing for an LLC in Idaho. There are different types of legal entities and you want to select the one that is right for your goals and your business.
When it comes to business formation, consulting with attorneys at Generations Law Group could help ensure that your business operates with as much legal protection as possible.
#4 Doing Everything Yourself
A do-it-yourself approach might save some money on some things, but if you execute an important part of your business improperly, it could cost you more down the road.
For instance, if you do your business taxes yourself, making a mistake could cost you tens of thousands of dollars later on. Similarly, doing your own accounting could lead to serious business faux paus, too.
While some DIY tasks can save money, it is important to delegate the more complex tasks to professionals to protect your business and your livelihood. Typically, working with professionals for anything in the legal and accounting areas is a wise investment in your business’ lifespan.
#5 Not Investing in Marketing
Marketing can take stagnant sales to skyrocketing revenue. Well-executed marketing will help you find new customers/clients and assist with developing brand recognition in your community.
A mix of digital marketing and conventional advertising typically yields great results. At the very least, it is important to have a polished website and some social media accounts.
If marketing is not your forte, finding a marketing agency that offers traditional and digital marketing could do wonders for your business.
#6 Counterintuitive Pricing
Determining proper pricing is the lifeblood of your business.
Setting your pricing too low will affect your profit margins, while using pricing that is too high will turn your customers away. While undercutting the competition a little can help boost sales, selling a product or service too low is a recipe for failure.
The bottom line is that your prices should be carefully determined and based on ample research.
#7 Improper bookkeeping
Bookkeeping and tax planning are crucial parts to operating a business successfully. Improper bookkeeping and poor tax planning could cause losses that you may not be able to survive.
When in doubt, consult with a reputable accountant and/or an attorney well versed in tax planning, payroll, bank account reconciliation, and sales tax.
#8 Not Utilizing Business Contracts
Well-written business contracts can mitigate a lot of risk. Having contracts for vendors, employees, and even your clients help protect your business. Taking a DIY approach to these contracts or not having them at all could set you up for failure.
Consulting with experienced business attorneys is a great way to protect your company and its products or services. The Generations Law Group can help you develop non-disclosure agreements, service agreements, vendor contracts, and employee handbooks that can protect your enterprise for years to come.
Contact Generations Law Group
If you’re looking to dive into the world of business ownership in Boise or throughout Idaho, we invite you to schedule a consultation with our law firm. We provide counsel on everything from forming legal entities to mitigating risk.
Call the Generations Law Group at (208) 401-9300 to speak with our team.