1. Not Doing Market Research - When selecting a small business to start, it is vital to research the industry and the current market for the products or services to be offered. Search online, research at your local library and talk with your local small business organizations to put together a full market research report to find out who your competition is, how they do what they do, pricing for your product or service, what’s in demand, etc. These factors will help you evaluate the opportunity for success.
2. Choose a Strong Personal Match & Have a Passion - When starting a small business, evaluate accurately what your personal strengths are. Your personal gifts will come naturally as you go about conducting and growing your business. For example, don’t go into opening a restaurant, if you have never worked in that industry before.
3. Lack of Capital - The top reason for small business failure is not failure to plan or choosing the wrong business concept, but is lack of capital. It takes money to do it right! Research will help you to determine the amount of capital to have on hand as well as the reserve money that should be kept in the event of an expansion opportunity or an emergency.
4. Lack of a Business Plan – if you fail to plan....you plan to fail. Spend time to write out a business plan for not only the short term, but the long term. Research local organization that can help you write one. Look up SCORE or the SBDC (Small Business Development Center) in your area for help. Work through 3 months, 6 months, 1 year, 2 years, 5 years and 10 year plans. Plans may change over time, but you’ll be in better shape with one, than without one.
5. Ask for Help - Many professionals view asking for help as a sign of weakness. It is not! Successful individuals in business recognize that asking for help is actually a sign of help. Find a mentor. Above all...Don’t wait until something becomes a challenge for your business, as at this point, it is likely too late to make the necessary corrective actions. Surround yourself with experienced professionals throughout all phases of your business planning, start up and operation.
6. Lack of Customers - Many small business owners go into business as they have a specific skill, talent or interest. And, they will generally not fail due to those things. But, they fail due to lack of steady customers and steadier revenue. Spend a significant portion of every day working to build new customers by marketing your products and services through social networking, at events, via email marketing, etc.
7. Price Right – Don’t price your product or service out of the market, unless you’re specifically targeting high-end customers. And don’t price yourself too low – you’ll never have enough revenue to continue running your business. Be sure to spend time researching the current market for pricing when setting yours. And, if things are not working smoothly in the early stages, be sure to re-evaluate so that you can make changes as needed.
8. Lack of Budgeting and Accurate Accounting - While no one really likes the word ‘budget’, in small business, it is vital to its survival. You need to know how much you spend, how much you earn and what your sales margins are. Figure out exactly how much money you need to operate, purchase raw materials, etc. first. Then you determine expenses vs. income. Make necessary adjustments as necessary to enable your cash flow to always remain positive.
9. Poor Record Keeping – If you are unable to keep accurate records, find a professional who can.
10. Growing Too Quickly – Slow and steady growth plans help you keep a steady hand on your business and allow you to be in control every step of the way. Growing too quickly may result in an out-of-control business. Grow organically instead of forcing growth as this can cause challenges in cash flow.