By Tom Pedreira

A critical step in launching a successful business is to go through the process of anticipating beforehand the ways in which it can fail. You may have the best business idea in the world but you are apt to fail as an entrepreneur if you haven't done your due diligence up front. This is borne out by reported statistics that most new businesses fail within the first couple of years. 

Here are five sure shot ways to scuttle your business before it has a chance to succeed:

1. Don't Do A Business Plan. A budding entrepreneur with a great business idea is full of optimism and chomping at the bit to get started. Enthusiasm has to be tempered, though, by having the discipline to reduce a business plan to writing. This process includes a candid assessment of risk factors and what can go wrong.  If you can't put it down in writing beforehand, you aren't as likely to succeed down the road.

2. Don't Use Professional Advisors. Every person going into business should have an accountant, a lawyer, a banker and an insurance agent lined up before opening the doors. Their fees and costs should be factored into the operating budget. If you can't afford them up front, you certainly are not going to be able to afford them down the road when you run into trouble.

3. Don't Have A Written Agreement With Your Co-Owners. If there are going to be co-owners in your business venture, it is essential to reduce to writing your respective rights, duties and obligations. One of the easiest ways to do this, and to mitigate potential personal liability exposure at the same time, would be to incorporate or form a limited liability company through which to operate your business. It is also extremely important to be clear on who is required to contribute what -- including not only capital contributions, but also time devoted to the business. A buy-sell agreement is always a good idea.

4. Don't Read The Fine Print On Your Long-Term Obligations. Oftentimes, it is only when things start going bad that business owners first realize that they have personally obligated themselves on their lease, bank financing or other long-term obligations. This is one reason why many new business owners find themselves in bankruptcy when things don't turn out as they planned. It is one of the risks of starting up a new business.  You can also always anticipate that your landlord or your banker is going to require a personal guaranty. Thus, these are risks that need to be weighed carefully before opening your doors.

5. Don't Pay Your Taxes. Another common mistake of many new businesses is to fail to pay careful attention to tax obligations. A prime example would be payroll taxes, which can be a substantial burden on any new business with employees. Gross receipts taxes would be another example. Many businesses go under because they fail to keep up on and pay these tax obligations. In many instances, personal liability can also attach to the business owners.

Tom Pedreira, an attorney with the Mikkelborg firm, represents startup companies and closely-held business in all aspects of their regulatory requirements and legal needs.  He has also volunteered his time to answers questions for lawyers.com as a weekly panelist on Business Law.  He has responded to hundreds of questions from new and prospective business owners. Over and over, many of their questions deal with the same problems that arise when they fail to do the necessary homework before starting up their businesses.