5 Crucial Mistakes Early-Stage Businesses Make (2025 Update)

Young businesses don’t always do things by the book, often going with the flow and managing issues as they arise. However, there are some things that need to be done the right way, because if you don’t, it can mean trouble for your business later on. It’s common to make mistakes in the early days of starting your business, but with the right knowledge, tools and protections you can avoid these. In this article, we’ll explain the common mistakes early-stage businesses make and what you can do to avert these.

1. Failing to protect your IP

In the early days, often the most valuable part of your business is the idea. Australia similarly operates under a first-to-file system, meaning that legal rights attach to whoever registers their intellectual property first. As a result, it is vital that you Trademark your name and logo early on. Doing this will also prevent you from accidentally infringing on someone else’s trademark. If this happens, you may find yourself defending a legal action against your business. If you’re yet to file these, you can also protect your intellectual property by having investors and employees sign NDA’s (Non-Disclosure Agreements) and Confidentiality Agreements.

2. Neglecting advice on financing term sheets

Investors employ a number of approaches to protect governance, liquidation privileges, and preferences in financing structures. Business owners generally enter the negotiations without the intricacies each investor will take advantage of. Seeking appropriate legal advice to take you through these terms is a necessity, as a lawyer will be able to explain to you what can and can’t be pushed back on. You also need to be mindful of how dilution will occur in the event of a venture-funded deal at a later date.

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3. Not having a clear focus

Develop an initial business focus that you can articulate naturally. You and your team should be aligned in answering what you do, who you do it for and what your unique advantage is. When you start a business, it can be tempting to want to offer everything from the get go. However, businesses which do this risk losing sight of their business’s north star and spreading themselves too thin. Expanding your products and services should come at a time when your business is already established and on solid ground. One key way you can ensure you stay on track is by drafting a comprehensive business plan. Having clear goals when running your business will give you a clear target to work towards and unite your team.

4. Forgetting about your customers

Who are your customers? What do they want? Your business’s success depends on bringing in customers, and neglecting them is one of the biggest mistakes early-stage businesses make. Although making a profit is important as a business, this will only happen if customers are happy with what your business offers them. Knowing your customer base will also inform how you market and promote your business, and how you make your business stand out from competitors. It’s critical to remember that no matter how successful your business becomes, your customers should always be at the forefront of what you do.

5. Financial problems

Raising the correct amount of capital is vital to ensure that you don’t hinder your future raising potential. You also don’t want to run out of money at the wrong moment. Managing your money wisely requires careful planning and sticking to what at times can be a tight budget. Think about how you can make the most of your capital – is it by pouring more money into your marketing efforts or hiring more staff? It’s also important to keep track of any and all of your debts so your business doesn’t become insolvent.

Conclusion

Starting a business is one of the most exciting things you can do, but it’s also important to set your business up for success by avoiding the common mistakes early-stage businesses make. Many businesses fail within the first 5 years of operating and doing what you can to mitigate risk will benefits your business in the long run. The best way you can do this is by tackling the legals early on, so they don’t come back to bite you further down the track.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

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