Biggest Mistakes Entrepreneurs Make

This morning, I am passionate about talking about what I see as the biggest mistakes that entrepreneurs and small business owners mistake. The first mistake is putting off incorporation legal services. When I first starting practicing law, I did the same thing with the rational that I will incorporate later when I am making more money. This rational is faulty for two reasons. The first reason is incorporation legal services save your butt because you are not stuck paying for decisions that you made during the first years of your business experience. Slowly, business losses seem to mount and sometimes, you must dissolve a business and start over. There is no sham in this because it is reality. The second reason is you likely will have more money when you first began a small business adventure than later on during your initial years. I was speaking with my mom yesterday and we were talkinga about how I kept borrowing money. Every time, I felt that the loan was for a critical need and sometime, indeed it kept my business alive. In retrospect, the only thing more loan money would do is get me more in debt and cover up critical problems with my business enterprise. Losing money can be a healthy thing because you either quickly find answers to solve the problem or you file bankruptcy or worse yet, are stuck with this decision for a long time.

The second biggest mistake is failing to understand the necessity for personal and business asset protection. An experienced business owner will get sued multiple times and these lawsuits threaten the viability of your business and more importantly, threaten the viability of your family finances. Most small business owners do not realize that your business and you personally will be sued. Most small business owners believe that simple incorporation is enough and that is faulty logic. It is really important that you protect your personal assets and especially your home. Yesterday, I was speaking with a small business owner that got a judgment who is 65 years old now. You could see the worry in his eyes because he is seeking to borrow a loan from his friends. Truthfully, it is a bad loan because he may not be able to pay it back. But, I have learned that small business owners will do a lot to prevent a lien against their home. In some cases, if you have a lot of equity, the creditor may foreclose your home. The small business owner I met with is scared to death about his house being foreclosed. Quit frankly, it is a very real prospect if we cannot settle. Right now, the creditor as all the leverage because they are experienced and know if they file a foreclosure lawsuit the Defendant will likely find the money to settle at a much higher price. Realistically, we will offer a low ball settlement and if the Plaintiff's attorney is any good they will know they have all the negotiating position. These are the type of mistakes small business owners make and life is brutal. Financial security for many small business owners will never ever be realized again. The American dream of being a small business owner becomes the American nightmare. If you do not believe me, talk with twenty (20) business owners and ask them their experience with lawsuits. If they are being honest, you will be surprised how many small business owners have been sued. Surprise, insurance seldom covers your losses because they are lawsuits such as breach of contract lawsuits or business disputes that are outside of liability insurance.

Sean Robertson is an small business and asset protection attorney that concentrates in small to medium sized business law and lawsuit liability planning for business owners and their business ventures. Sean Robertson may be reached at 312-498-6080.

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