5 Mistakes That Can Sink Your Business Before It Even Starts

When Mark and Sarah launched their tech startup, they were full of excitement and ambition. They had a groundbreaking product, secured funding, and were ready to disrupt their industry. But just six months later, they faced a devastating setback: a competitor filed a lawsuit claiming trademark infringement. Unaware of the need to trademark their brand early on, Mark and Sarah had to rebrand, pay legal fees, and lose valuable time—all because of a preventable legal mistake.

Starting a business is an exciting journey—but it’s also filled with pitfalls that can derail your success. Many businesses fail because of preventable mistakes, often involving legal oversights. These missteps may seem small at first, but they can lead to significant challenges down the road.

Here are the five most common legal mistakes that can kill a business before it even gets off the ground—and how you can avoid them.

1. Skipping the Legal Basics

Starting a business without setting up the proper legal structure is like building a house without a foundation. Entrepreneurs often overlook critical steps such as:

Selecting the right business entity (LLC, corporation, etc.).
Drafting an operating agreement to clarify roles and responsibilities.
Registering and complying with state and local laws.

How to Avoid It:
An experienced attorney can help you choose the best structure for your business, handle necessary filings, and ensure you’re compliant from day one.

2. Failing to Protect Intellectual Property

Your ideas, brand, and products are some of your business’s most valuable assets. Yet many entrepreneurs don’t take the necessary steps to protect them, leaving them vulnerable to infringement or theft. Trademarks, copyrights, and patents are essential to safeguarding your intellectual property.

How to Avoid It:
Legal services can help you secure intellectual property rights and address any disputes before they escalate.

3. Overlooking Contracts (or Using Templates)

Relying on handshake deals or generic online templates might save time upfront, but poorly drafted agreements can lead to confusion, disputes, or even lawsuits. Key contracts—like vendor agreements, client contracts, or partnership terms—should be tailored to your specific needs.

How to Avoid It:
Work with an attorney to draft and review contracts that are clear, enforceable, and designed to protect your business interests.

4. Ignoring Compliance Requirements

Even small businesses need to comply with local, state, and federal regulations. From tax filings to industry-specific standards, failure to meet these requirements can result in fines, penalties, or even forced closures.

How to Avoid It:
An attorney can guide you through compliance requirements, helping you avoid penalties and maintain a good standing with regulatory agencies.

5. Neglecting Legal Planning for Growth

Many entrepreneurs focus solely on launching their business but fail to prepare for the challenges of success. Scaling operations, hiring employees, and expanding into new markets all come with legal risks that need careful planning.

How to Avoid It:
Proactive legal services ensure you’re prepared for growth, from employee agreements to commercial leases and beyond.

The Key to Avoiding These Mistakes

Starting and growing a business is challenging, but you don’t have to navigate these risks alone. Working with an experienced attorney ensures your business is built on a solid legal foundation, giving you the confidence to focus on growth.

At Mullikin Legal, we provide tailored legal solutions to help entrepreneurs avoid costly mistakes and protect their businesses. From business formation to compliance and contracts, we’re here to guide you every step of the way.

Protect Your Business Today

Don’t let preventable mistakes stand in the way of your success. Schedule a consultation with Mullikin Legal to discuss how we can help your business thrive.