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Small companies should do lots of preparation before entering the market as business start-ups to ensure success, one group has said.
The Federation of Small Businesses (FSB) said that a new company formation could overstretch itself without sufficient preparation.
Simon Briault, spokesman for the group, commented that a common mistake for business start-ups was setting up too early and taking on more work than they can handle.
He added: "There needs to be a sustained period of preparation where you actually set your business afloat and that is in terms of making sure you know your market really well and that you know your competitors very well [and] that you have got a solid financial foundation to work from.
"There needs to be a lot of preparation and there are a lot of small businesses that tend to set up without having done that and that explains the fairly high failure rate in terms of the first three years."
Although setting up a small business is a risky proposition the reward levels can be very high, he added.
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