![\"Female](\"https:\/\/www.checkworks.com\/blog\/wp-content\/uploads\/2015\/11\/bigstock-Female-Stall-Holder-At-Farmers-87399203.jpg\")
<\/a><\/p>\nStarting a business is exciting.\u00a0 Suddenly, you are pursuing your dream and hoping to make money in the process.\u00a0 But according to Bloomberg, eight out of ten entrepreneurs who start businesses fail in the first 18-months.\u00a0 What can be done to prevent your own failure?\u00a0 Here are three major pitfalls business owners find themselves in.<\/p>\n
<\/p>\n
1.<\/strong> \u00a0 CAPITAL<\/strong> \u2013 in capital letters<\/p>\n It is no secret that many entrepreneurs grossly underestimate the amount of capital it will take to get a business up and running, but start-up costs are not the only capital needs of a business.\u00a0 Once the business begins to make money, what do you do with the capital?\u00a0 How do you reinvest it?\u00a0 Where do you reinvest it? \u00a0When?<\/p>\n Never underestimate the power of planning.\u00a0 Sitting down with an accountant and a successful mentor will not only lay out what your start-up costs will be, but it will also generate ideas for how to acquire the capital required for initial success.\u00a0 Furthermore, the planning phase can help you create both short- and long-term strategies for growing the business. \u00a0Short-term plans will\u00a0include how to build a cash cushion separate from operating costs that you can access when the\u00a0unexpected comes along.\u00a0 Long-term strategies for reinvestment will help you resist the temptation to reinvest every dime into bigger office space, more staff, or better technology along the way.\u00a0 These\u00a0strategies provide direction for every capital decision from expansion to raises.\u00a0 Which brings about the next point.<\/p>\n 2. \u00a0Hire the right people and pay them what they\u2019re worth.<\/strong><\/p>\n Never assume that your passion for your business is contagious.\u00a0 The temptation with start-ups is to hire motivated people who buy into the idea, then pay less than market value with the promise that, if the product takes off, their pay will increase exponentially with the success of the business.\u00a0 Not only does this lead to employee burnout, you run the risk of losing your best employees to better-paying organizations once they have been trained.\u00a0 In the long run, hiring the right people to do the right job, and paying them well not only saves time, but ultimately money.<\/p>\n When you consider all of the costs associated with employee turnover \u2013 hiring, training, reduced productivity, etc. \u2013 it costs between 30 and 50 percent of an entry-level employee\u2019s annual salary to replace them.\u00a0 That figure jumps to 150 percent of a mid-level employee\u2019s annual salary.\u00a0 All things considered, spending precious capital and time on the wrong employee seems fool-hardy at best.<\/p>\n 3. \u00a0Hire an accountant and don\u2019t just talk to him or her at tax time.<\/strong><\/p>\n Most entrepreneurs do not have accounting experience.\u00a0 It is common to find an entrepreneur who has a great idea, and enough capital to start a business, but who ends up in a bind because he or she fails to seek the help of a financial professional.\u00a0 Even many\u00a0who hire an accountant only talk to him or her when they receive a notification from the IRS.<\/p>\n Not only does your accountant see your business in dollars and cents, he or she can help you make sense of those numbers.\u00a0 By including your accountant in quarterly reviews, you are gaining valuable insight into whether you are reaching your short- and long-term goals.\u00a0 Do you have enough cash flow?\u00a0 Is your accounts receivable up to date? Do you need more capital?<\/p>\n Furthermore, looking at previous earnings and expenditures can also help you predict your future.\u00a0 Using data from your organization and trends in the market, your accountant can help you decide when to take on partners or investors, how to plan succession in the organization, when to sell the business if you choose to, and when to expand into other markets.<\/p>\n Ultimately, success breeds success. Surrounding yourself with successful mentors and competent financial professionals, committing to short- and long-term planning, and following through with those plans\u00a0will mitigate many of the common financial mistakes business owners make.\u00a0 While there is inherent risk in entrepreneurship, more often than not it is the risk that makes the process fun.<\/p>\n","protected":false},"excerpt":{"rendered":" Starting a business is exciting.\u00a0 Suddenly, you are pursuing your dream and hoping to make money in the process.\u00a0 But according to Bloomberg, eight out of ten entrepreneurs who start businesses fail in the first 18-months.\u00a0 What can be done to prevent your own failure?\u00a0 Here are three major pitfalls business owners find themselves […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31,1],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/746"}],"collection":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/comments?post=746"}],"version-history":[{"count":4,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/746\/revisions"}],"predecessor-version":[{"id":751,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/746\/revisions\/751"}],"wp:attachment":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/media?parent=746"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/categories?post=746"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/tags?post=746"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}