New Business Guide

Learn from others' mistakes. These 3 errors kill 80% of new businesses.

#1
Mixing Personal and Business Finances
Using personal accounts for business, paying personal expenses from business accounts, or not tracking expenses properly.
Can cost $10,000+ in lost deductions and legal fees

What Goes Wrong

  • Pierces the corporate veil - lose LLC protection
  • IRS audit red flag
  • Can't prove business expenses for deductions
  • Impossible to get business credit

How to Avoid It

  • Open a dedicated business bank account DAY ONE
  • Get a business credit card (even if secured)
  • Use accounting software (Wave is free)
  • Pay yourself a salary, don't just take money
#2
Not Understanding Their Numbers
Not knowing profit margins, cash flow, break-even point, or customer acquisition cost.
82% of businesses fail due to cash flow problems

What Goes Wrong

  • Running out of cash (even while 'profitable')
  • Pricing too low and losing money on every sale
  • Spending too much to acquire customers
  • Can't make informed decisions

How to Avoid It

  • Know your gross margin (revenue - direct costs)
  • Track cash flow weekly, not monthly
  • Calculate your break-even point
  • Know your CAC (customer acquisition cost) vs LTV (lifetime value)
#3
Trying to Do Everything Themselves
Not delegating, not hiring help, spending $50/hour time on $15/hour tasks.
Opportunity cost of $50,000-200,000/year in lost growth

What Goes Wrong

  • Burnout and health problems
  • Business can't grow beyond your capacity
  • Poor quality in areas outside expertise
  • No time for high-value activities

How to Avoid It

  • Calculate your hourly rate (desired income ÷ 2000 hours)
  • Outsource anything below your rate
  • Start with virtual assistants ($5-15/hour overseas)
  • Use automation tools (Zapier, Make.com)

Other Common Mistakes

No written contracts

Always get it in writing. Verbal agreements are worthless in court.

Ignoring taxes

Set aside 25-30% of revenue for taxes. Pay quarterly to avoid penalties.

No business plan

Even a one-page plan forces you to think through your model.

Wrong business structure

LLC is usually best for liability protection and tax flexibility.

Underpricing

Price based on value, not cost. You can always discount, never raise easily.

No emergency fund

Keep 3-6 months of expenses in reserve before taking profits.

Ignoring marketing

If you're not marketing, you're dying. Allocate 10-20% of revenue.

Not getting insurance

General liability is cheap. One lawsuit can end your business.

New Business Quick Start Checklist
Do these in order before you start selling
1
Choose business structure (LLC recommended)
2
Register with your state
3
Get your EIN from IRS (free, instant online)
4
Open business bank account
5
Get business credit card
6
Set up accounting (Wave, QuickBooks)
7
Get general liability insurance
8
Create contracts/terms of service
9
Set up separate business phone number
10
Register for state sales tax (if applicable)
11
Get business licenses/permits
12
Set aside tax reserve (25-30%)

Ready to start your business the right way?