How to set up a company? Avoid these 5 common startup mistakes

As the entrepreneurial boom sweeps the world, more and more young people and innovators are setting up companies and developing their own business empires. However, although the market environment is becoming increasingly friendly, start-ups still face many challenges and gaps. News investigations show that information gaps and insufficient preparation during the start-up period often lead companies down the wrong path. This article will comprehensively analyze the key processes that cannot be ignored in the early stages of establishing a company, list the five most common mistakes, and provide clear countermeasures to help entrepreneurs avoid unnecessary mistakes.

1. Planning and preparation before establishing a company

The Importance of Market Research and Positioning

Before establishing a company, sufficient market research and accurate positioning are the cornerstones of success.According to industry experts, many companies ignore market size and consumer demand when establishing a company, which ultimately results in a waste of resources. Refer to the table below:

suggestion:

• Develop clear market segments and target customer groups
• Data were collected using multiple methods such as questionnaires, focus groups, and SWOT analysis.
• Assess the strengths and weaknesses of competitors and consumer trends, and position your business in a way that does not deviate from demand

Business plan and funding

A detailed business plan is the key to attracting investors and partners.A complete business plan should include vision, business model, financial budget, marketing plan and risk assessment.

suggestion:

• Prepare an operating budget for more than 3 years
• Plan multiple sources of funding (angel investors, bank loans, government subsidies)
• Prepare a reserve fund for emergencies

Regulatory compliance and corporate type selection

Choosing the right company type and registering legally and compliantly are necessary steps.Common types of companies to set up include limited liability companies, joint stock companies, limited partnerships, etc. You need to choose the best one based on the size of your team and operational needs.

Regulatory highlights:

• View special regulations for the industry (such as foreign business regulations, health regulations, etc.)
• Confirm that there is no duplication in the company name and prepare all the establishment documents (articles of association, seal, etc.)
• Register and file tax returns with the competent authorities in accordance with the law to reduce future legal risks

2. Analysis of the five common mistakes in the startup phase

According to statistics from several business incubators, more than 60% of new businesses face operational bottlenecks or close down within two years of their establishment. Here are five of the most common mistakes, along with tips for preventing them:

1. Ignoring team building and division of labor

In the early stages of a company's establishment, limited manpower often leads to multitasking, but if there is a lack of clear division of labor, management chaos is likely to occur.It is easy for a CEO to be in charge of both sales and finance at the same time, which not only leads to low efficiency but also frequent decision-making errors.

Countermeasures:

• Establish a clear organizational structure and divide the work among the responsible persons
• Implement regular meetings to clarify roles and responsibilities
• Prioritize partners with diverse backgrounds and enthusiasm

2. Loose financial controls

An inadequate financial system is one of the main causes of startup failure.According to interviews with experts, some entrepreneurs mix personal and company funds, leading to accounting confusion and tax disputes.

3. Product or service development is too idealistic

Many startups believe that as long as their products are good, they will automatically have a market share, and as a result, they ignore user feedback and business model adjustments.

bill:

• Too much manpower invested in R&D without market validation
• Ignore product updates and service support

suggestion:

• Beta testing can be started early to collect opinions from target customers
• Build MVP (minimum viable product) to improve step by step and reduce unnecessary waste

4. Insufficient marketing budget or operational errors

If a company is established and relies solely on word of mouth or promotion through WeChat Moments, its growth will hit a ceiling.The survey pointed out that only 20% startups effectively used digital marketing and affiliate promotion channels within a year.

suggestion:

• Multi-pronged approach: social media, blogging, influencer collaboration, SEO optimization
• Use affiliate marketing platforms such as AffiMarket Easy Alliance, quickly expand exposure and increase sales. AffiMarket brings together brands such as travel homestays, shopping websites, AI tools, etc. Whether you are a blogger or a startup company, you can join for free. Through professional teaching and consulting, we will continuously optimize your online marketing and help you expand the market steadily.

5. Ignoring legal, tax and administrative compliance

Regardless of the size, operating in compliance is the first step to long-term development.Many new startups suffer heavy fines or even company deregistration due to unfamiliarity with the reporting process, forgetting to file taxes on time, or ignoring contract details.

Countermeasures:

• It is recommended to hire a professional accountant or consultant
• Complete tax returns and financial declarations on time
• Sign a formal contract with partners to protect the company's rights and interests

3. From the establishment process to sound operation: a must-read guide for new startups

Choose the right company type

Startups of different sizes and development stages need to choose the most suitable company type according to their own circumstances.

Establishing systems and process

The introduction of systems and information systems can effectively improve management efficiency and avoid human errors.

• Use cloud-based ERP, CRM, and accounting systems
• Formulate SOP processes and internal regulations
• Regular employee education and training to enhance team quality

Conduct risk management and filing planning

After establishing a company, continuous attention to changes in the market, technology, finance and regulations is the principle of sustainable operation.

• Establish talent retention plans for key personnel to prevent talent loss
• Buy all kinds of insurance, including liability insurance and property insurance
• Long-term cooperation with accountants and legal advisors to prevent loopholes

Conclusion

While starting a business is exciting, every step must be carefully planned and executed. Only by constantly improving business management and learning from the experiences and mistakes of predecessors can we stand out in the fiercely competitive entrepreneurial wave. Whether you are starting a business for the first time or have been in the market for many years, keeping in mind the above plans and measures, from market positioning, team building, financial management to marketing and regulatory compliance, are all indispensable cornerstones for the success of new businesses. Although the road to entrepreneurship in the future is full of uncertainties, as long as you proceed step by step, learn humbly and have the courage to change, your entrepreneurial dream will take root and continue to thrive.