I'm 24. I started a company 7 months ago, planning to bootstrap it with $5,000 borrowed from family.

We started working hard at creating our brand. Logos, webdesign, website copy, flyers, and SEO. We divided our time equally between these tasks and selling the product. We were headed to profitability in short order.

I quickly learned my cofounder was over his head in personal debt, and could no longer work full time. Some of our borrowed money went to him to try to keep him around for a couple of extra months ($1,200). It didn't work and he had to get a job.

We've been floundering back and forth, spent the majority of our money, I invested another $1,000 to help us make one more sales surge to allow us to dedicate more time. We planned to see if this startup would work, setting a sales and spending goal in under 60 days. Success and we continue, failure and we cut our losses.

We planned to make it happen starting next week.

Friday afternoon I got a call from a business owner in another state, telling me that our business name infringes on his trademark for his business name. Our name would be mycompanyname to his companyname. We had only checked and seen that companyname.com didn't exist, we did not check the trademark database.

At this point, discouraged, unable to afford new marketing materials and a complete redo of everything we've done so far, we're left with little money and a threat of a lawsuit if we don't change everything.

Here are the mistakes that I made, and will learn from:

1) Learn about the financial position of any cofounder. A cofounder's personal situation will hugely impact his/her ability to grow the business.

2) Investigate any trademarks or copyrights on any of your branding or naming. Wasting time in a bootstrapped business will ruin you.

3) Have a plan. Not just a mental plan, but an actual written plan. Decide what is required of the cofounders, decide where money will go, decide your failure point.

4) Be prepared to drop the project, or go it alone. Putting all of your eggs in a basket carried by your cofounder can lead to disaster if you aren't prepared to run with the project yourself.

What other lessons can I learn from this? Where can I improve so that my next project doesn't fail in similar fashion?

tldr: My business failed because I made mistakes in timing, my cofounder, and business branding. What else can I learn from my experience?

EDIT: After a few comments, and an e-mail, I should clarify that this is not necessarily a web-startup or app. It's a business targeting seniors (hence the flyers, which were placed in senior centers and used at senior health conferences). My cofounder came into the picture as the one with more experience working with the senior market. We had suppliers for our product, so our main focus was to sell, sell, sell. So, to add another lesson:

5) Cash in a small bootstrapped company should be spent on client acquisition. Not on whiteboards, office refrigerators, business cards, or flyers.

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user:	barisme
created:	March 27, 2011
karma:	44