Entrepreneurs should not act solely based on projections

A common error made by Illinois entrepreneurs involves them getting ahead of themselves and acting according to the growth projections they have made in their business plans rather than on the actual business realities they are currently experiencing. While making projections is an important part of the business planning process, immediately acting upon them without waiting to see the direction in which the company is going can be very problematic.

Business owners may do such things as hire too many people, invest in commercial space that is too large and spend excessively because of their growth projections. When they do this, they may end up having to lay people off. They might also be faced with unused space and excessive levels of debt their company simply can't handle. These problems, in turn, may lead to the venture's ultimate failure.

Business owners can avoid these issues by operating with a small and lean budget. They can still work and plan towards growth, taking note of their market and customer base and making changes as needed. It is best for a business to plan to be flexible and agile rather than trying to expand too quickly.

In advance of writing a business plan and making projections towards growth, entrepreneurs should also consider what entity form would work best for their business model. There are many differences between corporations, limited liability companies and partnerships, with the impact on personal liability and federal income tax consequences being two of the key ones. An attorney who has experience in providing advice and counsel to start-up companies can often make suggestions based upon the client's particular set of circumstances.

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