Caufield & James, L.L.P Caufield & James, L.L.P

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Mistakes that could result in a failed business

There is no guarantee that a company formed in California or any other state will succeed. However, there are steps that a business owner can take to improve his or her chances of creating a successful company. For example, a company should have a financial plan, a business plan and a marketing plan in place before starting operations. Ideally, an organization will have tangible goals and the ability to measure its progress in meeting them.

A company will always need to know its numbers whether it was founded yesterday or a century ago. At a minimum, a business will need to have a profit and loss statement, an income statement and records of all transactions. Those who want to start their own company should know the difference between profit and cash flow. Creating a balance between the two is important in allowing a startup to grow and thrive.

Typically, customers have 30 days from the time that they receive a good or service to pay for it. However, some will not pay unless they are told that payment is due. Therefore, it is important to keep track of accounts receivable and to provide written notice if a balance becomes due or is past due. Finally, entrepreneurs should know how much it will take to start the company. Overspending during the startup phase can doom an organization to failure.

The business formation process may be among the most important periods in a company's existence. This is the time when an entrepreneur will likely make key decisions such as whether to run the company as a sole proprietor or a corporation. An attorney may be able to provide insight into some of these decisions. Attorneys may also help to create or file paperwork with state or federal regulators.

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