The San Francisco Chronicle has a good article here which details what they consider to be the top 5 “expensive new business mistakes” that entrepreneurs fall into regularly. They are:
1) Not registering your business with the state
2) Moonlighting without telling your boss
3) Not charging taxes (e.g. sales tax)
4) Not using a unique (i.e. not trademarked) business name
5) Not being insured
I would add to this list one other major item for all small businesses: 1) Not having standard written contracts. Most small business owners operate their business on the strength of their good name and mutual trust between themselves and their vendors or clients. However, while those attributes are laudable, the truth is that every business owner will face a contract dispute at one point or another. Many small businesses do not use standard written contracts with their vendors, and this ends up hurting them dearly when a dispute arises. Without a written contract, it is simply your word against theirs, and there are no written rules for how to handle the situation. Such a situation can lead to a long legal battle, costing thousands of dollars in legal fees. While having a standard written contract you use in most situations won’t totally prevent litigation, it can greatly reduce the likelihood you or your company will lose a lawsuit because of ambiguity.
All of the items on this list are important, so make sure to talk to a small business attorney before starting your business so that you can avoid these mistakes.
