How to Avoid Common Pitfalls and Achieve Small Business Success

Written By Tina Martin

Small businesses are a vital component of our national economy. Nevertheless, starting your own business can be a risky venture. Potential entrepreneurs who rush in without adequate preparation may experience disappointment and financial loss. If you are considering small business ownership, be aware of how to launch and run your business professionally to minimize risk and maximize potential. Know the mistakes that can spell failure, so you can avoid them and achieve success as an entrepreneur

Make a business plan.

Failure to plan well can lead to failure across the board. You need to write a plan detailing every aspect of your startup. To do this, you will need to do the research so your information is accurate and your projections realistic. In your business plan, you should summarize the nature of your business, lay out your market analyses, assess the competition, and strategize for marketing. Your plan will help you stay on track as you launch your startup and may also be necessary if you intend to get a loan.

Set a budget and stick to it.

One common reason small businesses fail is the lack of capital and inadequate cash flow. If you launch your business without having accurately accounted for all potential expenses, you may quickly find that you can’t afford to meet them or have to cut corners. Similarly, being overly optimistic about sales and other income may land you with cash flow problems such as having to pay employees out of a fund that doesn’t exist. How can you avoid this? First, check your market analysis (Edit: Also check your budget, cash flow, sales projections, and anything that effects your bottom line.) so you can be realistic about both your expenses and your earnings. Second, work with an accountant who can help you budget correctly, streamline your taxes smartly, and more.

Check off the legal boxes.

You don’t want to open your business to the public only to realize you forgot to get a needed permit or don’t have the right insurance coverage. Research any licenses or permits that may be required for you to operate in your area and purchase a good business insurance plan. It is advisable for you to form your small business as an LLC (limited liability company) for added protection of your personal assets. The process is not complicated, but you can get support from a formation service like Zenbusiness when it’s time to register your company with the state.

Learn to be a good manager.

To run a successful business, it’s not enough to have an idea that looks great on paper — you need to have good management skills, too. A good manager is aware of every aspect of their business and sees how they all interrelate without falling into the trap of micromanaging. Good managers recognize when they lack knowledge or skills and educate themselves accordingly or delegate jobs to those more equipped to handle them. Finally, a good manager creates a positive work environment and practices stellar customer service.

Distinguish good risk from bad risk.

It’s easy to praise entrepreneurs as risk-takers after they have succeeded. But the reality is that risk-taking is not, in itself, a virtue. Making dangerous decisions and hoping they’ll pay off is rash. But there is a difference between good and bad risks. When evaluating whether or not a risk is worth it, weigh both potential gains and losses. Assess your likelihood of success, understand what the worst possible outcome could be, and have a plan for recovery if the risk doesn’t pan out.

Network intelligently.

You want to build connections in your community, as well as in your business field. But you don’t want people to feel like you are approaching them simply as resources. Entering communities of like-minded entrepreneurs where you collaborate and share knowledge can help you expand your reach while also gaining needed support. For instance, you can use social media to make connections. Above all, always boost those who have boosted you. You could also join your local chamber of commerce and connect with regional business owners.

Many small business owners are enjoying the satisfaction of working for themselves and seeing their dreams become a reality. You can join the ranks of successful entrepreneurs who keep our communities thriving, so long as you go in with a solid plan and check off all the boxes.

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