Learn about the common pitfalls when starting a business and how to avoid them.
Starting a business is an exciting time. But statistics show that over half of new businesses in the Phoenix, Arizona area fail within a few years. Business writers have commented as to why this happens. Here are some of the most common reasons why new businesses fail:
- Insufficient capital. A new business cannot be expected to turn a profit for at least one year so the owners must have sufficient capital reserves to pay business expenses and also their own living expenses for the first year.
- Lack of management experience.
- Lack of a business plan.
- Lack of sufficient information – poor accounting systems.
- Poor location.
- No website.
- Personal use of business funds.
- Attempts to grow the business too rapidly.
- Insufficient investigation of business partners or associates.
A common thread running through all of these troubles is insufficient investigation and planning before any money is spent. The initial planning stage is a critical time. Ideally, every prospective new business owner should have access to an experienced mentor. Unfortunately, this is seldom the case. But Arizona does have resources that can help. Here are a few:
Arizona Commerce Authority: www.azcommerce.com/start-up
Arizona Small Business Association: www.asba.com
City of Phoenix: www.phoenix.gov/econdev
Greater Phoenix SCORE: www.greaterphoenix.score.org
Local First AZ: www.localfirstaz.com
Seed Spot: www.seedspot.org
Assembling of a team of advisors is also important. Your team might include your banker, your CPA, a marketing consultant and your business attorney. Making the best use of all available resources to create a viable business plan is the best way to make sure that your business is among those that prosper.
The lawyers at Platt and Westby, P.C. have been practicing in the area of business law and real estate law in the Phoenix, Arizona, area for over 40 years. Contact any of our Phoenix Business lawyers at 602-277-4441 or use the e-mail contact utility on our website at www.plattwestby.com to schedule a no-fee initial conference concerning any matter involving Business or Real Estate. We will answer your questions and, where appropriate, suggest potential solutions.
Platt and Westby, P.C. has offices in Phoenix, Arrowhead, Avondale, Scottsdale and Gilbert, Arizona.