Top 12 Pitfalls of Starting a Business

Tennis fans Ernabel Demillo and Meredith Kasun thought they had a great idea for a new business: a neoprene belt that could hold all your tennis balls.

By March, BodyStyle Athletics was up and running, but it has been slower going than the owners expected. Why? They underestimated how much they had to spend to educate customers.

"We assumed people would know what the TennisRAQ was," explains Demillo. "We budgeted $1,000 a month on marketing and advertising, but we've way surpassed that. Right now, we're reworking the budget."

They're not alone. Experts say this is just one of several common mistakes first-time small business owners make. Here are the top 12 pitfalls and how to avoid them:

Idea Trumps Demand

You think you have the best idea for a company, but is there really a need? According to Victor Cheng, founder and president of Bookmercial Productions, a branding and marketing consulting company, veteran entrepreneurs "are demand driven. They become students of demand and find a solution. Rookies are supply driven. So they get the process backwards." Dig deep and really discover if someone would be willing to pay for your product or service. If the answer is no, then you don't have a business.

Being Just One of the Guys

Given today's tougher economic climate, a company needs to stand out in order to survive. That means solving a problem that no one has solved, recommends Cheng, author of Bookmercial Marketing (Innovation Press). "Or you can solve a common problem in a unique way, or solve a common problem in a common way but specialize in a particular audience."

Failing to Get Good Legal Advice

Before Pom Lampson launched her London-based lingerie line, Sexy Panties and Naughty Knickers, she ran the name past a lawyer. Told that it would be OK to have S.P.A.N.K. embroidered on the back of her designs, even if she started selling in the U.S., she set up shop in 2004. Four years later, it's become a favorite with celebrities like Gwyneth Paltrow, Eva Longoria-Parker and Kelly Ripa. But this success also attracted the attention of SPANX, a multi-million-dollar body-shaping hosiery company started by Sara Blakely in 1998. SPANX sued Lampson in April in Georgia for trademark infringement.