6 Top Mistakes Made by Small Business Owners

If you are thinking of starting your own business or already have, be sure that you avoid these common pitfalls that can mean the difference between a great business and no business at all.

1. Thinking you don’t need a business plan

Yes, you do! Business plans force you to examine your concept, study the competition, think about costs and plan a long-term winning strategy. A business plan is most often used to seek start-up funding, proving to the lender that the business will succeed. Even if you don’t need funding, taking the time to plan your business before running it is the smartest step you can make towards long-term success.

2. Mental bookkeeping

Keeping “the books” all in your head is a great way to get into big financial trouble. Expenses and income need to be carefully documented. Suppliers, customers and the IRS aren’t going to accept “oh, it was about $3500, give or take” when they come to you looking for a receipt.

There are many different ways to keep your books. If you prefer not to track your finances with pencil and ledger, try one of the many bookkeeping software packages available, such as Intuit’s popular QuickBooks. If you still feel that you can’t keep on top of making timely entries, hire a bookkeeper or accountant to keep all your business finances in order. You will be glad you did.

3. Spending money you didn’t need to spend

Don’t blow through all your startup capital. If you’ve done your business plan as you should, you will understand your break-even point. Budget carefully so that your business can operate beyond that point. Expect the unexpected and be prepared for sudden market changes, late-paying customers or other unforeseen expenses beyond your control. Don’t fall into the trap of buying into the latest fad or gimmick before thoroughly checking it out.

4. Expecting a market without marketing

Every business needs to be able to get the word out. Hanging up a sign and expecting a customer to find you is unrealistic unless you live in a place where they literally have nowhere else to go – or no internet connection. In today’s society, shopping for a product or service can mean going down the street – or thousands of miles away via a few clicks of the mouse.

Don’t assume that because you think your product is great that everyone else will, too. You have to convince them it’s great, and more importantly, show them that it is available. Market research is part of every business plan (see “Thinking you didn’t need a business plan”) and marketing is part of the day to day work of doing business. If you don’t understand how to best present your product or service, hire someone who does. The cost will soon be offset by increased sales.

5. Doing too much yourself

While a new business needs to be frugal, there is a point where trying to manage every aspect of the business yourself becomes cost-ineffective. You may feel as if you can’t afford an accountant or advertising or an administrative assistant to help out with paperwork, but by trying to do everything on your own, you may end up spending all your time trying to support your business rather than bringing business in. Hiring a helper can turn this around. Being in business for yourself doesn’t mean that you need to be or should be in business by yourself. Short on cash? Check out bartering for goods or services.

6. Lack of balance

While starting and running your own business requires a lot of hard work and dedication, ignoring loved ones can be as ruinous to your emotional and physical health as the business failing. Make sure that family and close companions understand and accept that you’ll be working long hours to get your dream off the ground. By the same token, make sure that you don’t abandon them. There are some life experiences that are not repeatable. Take the time off to enjoy them.

To avoid common small business mistakes, educate yourself on exactly what your business needs for success, don’t be afraid to delegate when needed and don’t build your dream at the expense of family and health. Most importantly, when you make an inevitable mistake, learn from it. If you do that, that’s one less mistake you’ll make again.