- Miscalculating startup costs or personal funds.
- Failing to plan and project.
- Buying unnecessarily.
- Failing to analyze all revenue streams.
- Ignoring the human element in mergers and acquisitions.
- Delaying a succession plan.
They stress the importance of having a proactive approach, involving proper management training — rather than procrastinating, overreacting, or calling their CPA in a panic when facing over-extension, employee problems, customer losses, or even bankruptcy.
With small businesses, we see these issues regularly, but especially the first two, which are intrinsically related — miscalculating or underestimating startup costs is the number one mistake we see clients make when starting a business, and going into operations under-capitalized is a harbinger of difficulties to come. However, with more planning and projection (second on the above list), one can come much closer to an accurate estimate of startup costs — we always recommend working with a professional to create fluid forecasts, “what-if” projections, and “worse-case”/”best case”/”expected” scenarios.