According to the Small Business Administration, the odds are stacked against you if you desire to start a new small business. First of all, the SBA notes that 30 percent of new businesses will fail within the first two years, 50 percent within the first five years, and a whopping 66 percent within a 10-year timespan. However, one of the best ways to prevent your business from failing would be to understand some of the biggest threats against your business. Although all you have to do is ask any experienced business owner and they will tell you that the pitfalls can be too numerous to count, you can consider these as the top three.
Although there are many ways that a government could either ruin a business or shut it down completely, one of the main issues where these two entities could conflict would be in the area of regulations. First of all, there is the tax code. Doing Business explains that all businesses have to pay taxes, but it isn’t as simple as just sending Uncle Sam a check. You have to be aware of which type of taxes to pay, when they need to be paid, and what taxes you should pay according to your business structure. Moreover, simply understanding taxes is just the beginning. When it comes to the government, you also have to understand labor laws, advertising rules, environmental concerns, privacy concerns such as HIPAA and even health concerns. Indeed, there was one young girl who started a cupcake business in her mother’s kitchen, but it had to shut down simply because the government health department insisted, they needed a separate kitchen for the operation!
There is no question that even one lawsuit can totally cripple a small business. Although there is a litany of lawsuit disputes that can occur, the most common one would be employment-related lawsuits. Legally Mine explains that for small-to-medium-sized businesses, the average total cost of employment-related claims that resulted in a defense and settlement payment is $125,000. This definitely makes proper business insurance a must for most small businesses.
The hard work of establishing a business includes such things as getting a location, gaining needed inventory, establishing your track record and gaining a customer base. Meliorate explains that you always have to be on the lookout in order to make sure that your services are still in demand. If you get complacent, it could mean the end of your business.
These are but a few of the potential pitfalls you could encounter. Always keep studying in order to make sure you can help your business stay afloat and adapt to different times.
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