For people who want an escape from the rat race of being a modern wage slave, entrepreneurship is the most obvious answer. So many Americans hate their jobs because of toxic work environments, stagnant wages, and long commutes. It’s why the number of self-employed Americans rose by 400,000 between 2020 and 2023.
People want to live life on their own terms and view business ownership as a turning point in their lives. However, many fail to consider the complexities that they have to tackle when the responsibility is all on their shoulders.
Despite these factors, business ownership is still seen by many as a path toward lasting wealth and freedom. In this article, we will learn how to turn that idea into reality by becoming aware of legal and investor management factors to avoid most business oversights.
The Differing Nature of Challenges: Not All Are Obvious During the Planning Stage
If you are starting a business, you already know that it requires planning and some business oversights. You might have some basic knowledge and even take into account factors that affect your location.
For example, some states like Tennessee have low tax burdens, which makes it easy to do business. If you’re in Nashville, you know it’s a city with a bustling entrepreneurial environment. You might be aware of the need for good marketing and even hire a Nashville SEO company for that purpose.
That’s a solid decision because, as Huckleberry Branding states, if your website isn’t easy to find online, you essentially miss out on potential customers. No one’s denying the importance of these steps.
However, while aspects related to marketing, staffing, and accounting are obvious, some factors are overlooked until way too late in the planning stage.
3 Most Important Business Oversights to Avoid:
1. Losing Confidence in Your Mission Due to Cautious Advisors
Sam Altman, CEO of OpenAI had some great insights for entrepreneurs that many founders ought to hear even today. Altman explains that the best founders he knows have “incredible, unwavering confidence in their vision .” it is the most important business oversight to avoid when you start a business.
However, risk is a double-edged sword, and it’s common to see advisors and consultants push founders to take the safe route. The result? Gradually, the big vision you have for your business gets smaller and smaller. This is why you want to be careful about the kind of advice you listen to.
The last thing you want is to let the entrepreneurial fire in you die out by heeding overly cautious consultants and stakeholders. Yes, a good founder will listen to advice and hear different opinions, but it should never compromise the integrity of your original mission.
2. Failing to Consider How to Register Their Business
Sure, it sounds obvious, but you’d be surprised at how many founders go blank when confronted with the question of what to register as. The way you register your business has several implications, such as liability protection, taxation, admin costs, brand image, and more.
Generally, the two most common choices are registering as a limited liability corporation (LLC) or as a sole proprietor. Both options have their advantages.
For instance, sole proprietorships don’t require any formal process to start. Filing taxes is simple and you are entitled to the profits you make.
With LLCs, the benefits include liability protection, more tax options, and the ability to have multiple owners. Naturally, there are cons to both as well, but the point here is that you need to think about these factors carefully. Whether it’s deciding between sole proprietorship vs. LLC or any of the other options, remember that your decision will have major implications in the future.
3. Allowing Yourself to Get Overwhelmed by Many Investors
Founders often fail to consider the implications of too many investors. When you’ve just established yourself, you have 100% ownership of your enterprise. However, with each new investor you bring in, you give up a certain percentage to them.
New founders tend to believe that the more investors, the better and accept everyone, but the wise choice is to be selective. Issuing new shares in financing rounds ends up diluting your ownership percentage. What’s more, you have to think about your option pool. This refers to the 15 – 25% of shares that you set aside for future employees.
This is why it’s common to see businesses favor a few large investors over multiple small shareholders. It makes things far more complex and inefficient. Run a tight ship, and you’ll thank yourself in the future.
Long story short, if you wish to start a business to escape the rat race, actually do your research. Avoid assuming that you can figure things out because, with business, mistakes are expensive. Sure, if you have the backing and capital to ‘learn via experience,’ then go ahead. It is the most important business oversight to avoid when you start a business.
If not, be open to researching even the very basics. Research and learn even that which seems obvious, because odds are, there will be something important you can miss. Remember, the rewards of being the founder of a successful enterprise are enough to change your life. In other words, the effort you put in is going to be worth it.
