We have seen a number of startup businesses that have signed up for a shop lease on commencement of the business, only to find that sales did not eventuate as planned. If the business closes, the obligations to pay for rent will continue until another tenant can be found. This can add several months rent to the loss already incurred on closure of the business.

Similarly think twice about long term commitments for advertising, office equipment and other services. These are likely to turn into personal obligations if the business cannot pay them, and are best avoided until the business has a track record.

Be very wary of franchise businesses with glossy brochures but without a proven performance history. We have seen a number of businesses fail after signing on with franchisors only to find that the sales did not come and that promised support did not eventuate. A few successful franchises can be sold to another buyer for a profit, but more often we find that the owner ends up with nothing more than a capital loss.