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Avoiding the 10 Common Killers of a Small Business

10 Common pitfalls to avoid for a small business

businessStarting a business is a huge venture, and it requires a lot of hard work and dedication to get that business off the ground. Even with the best intentions, some people estimate that up to 50% of businesses fail within the first 5 years. Keeping those statistics in mind, some business owners have begun looking for answers on why those businesses do not make it. The following list highlights the top ten pitfalls for small businesses to avoid in order to succeed.

1. Starting the business for the wrong reasons:

There are many reasons why a person would open a business, and all of those businesses share an equal shot at succeeding. However, when a business owner opens shop for the wrong reasons, that business is executed with the wrong planning, the wrong passion, and the wrong mentality. Starting a business as a lack of other options such as a lay off or unemployment situation can leave an owner overwhelmed and barely treading water. A business takes months or even years of planning, and all aspects must be examined. Owners with a passion for the business or trade they are in stand a better chance of keeping that business afloat. Similarly, business owners must have enough know how to run a successful business.

2. Cash flow problems:

Many businesses are not prepared for the months, or sometimes years, that it takes for the business to grow enough to be profitable. Owners should prepare themselves for the fact that they not only need to have six months of operating expense money for the business, but also six months of living expenses for themselves while the business builds a client base.

3. The word hasn’t gotten out yet:

Advertising is key in getting a small business off the ground. Although word of mouth promotion is important to a business, there must be enough customers to begin with to spread to the word. Many owners overlook a budget for advertising, and this is a major mistake. Let everyone know where the business is and what service it offers. A good marketing campaign will pay for itself many times over.

4. Not enough room to grow:

When a business suddenly takes off, some owners are unsure on how to handle the onslaught of new business, and all the upgrades that it requires. Owners who reinvest in their companies give those businesses the upper hand. Technology is a big part of this pitfall. Many customers today are put off when a business does not use the technology that is expected. A business should not look cheap to customers, as it implies that the services or goods are cheap as well.

5. Image issues:

Along with advertising, businesses need to keep their reputation in tip-top form to keep their customers coming. Customer service should be the number one priority in any business, and those that show superior customer service have more word of mouth referrals. Along with keeping up with technology, image issues are also based on the physical appearance of the store and its employees.

6. Staffing issues:

As a small business grows, some owners are late to notice the need for more staff, or even more knowledgeable staff. Owners should analyze business trends frequently to ensure that their customers are receiving prompt and professional service from staff members.

7. Lack of planning for slower times:

Businesses are rarely booming all year long. There are months and seasons where business tends to slow down. Owners need to plan for those slow seasons by offering incentives for customers to come in and spend their money. Even with that planning, it is wise to have a cash back up to cover those leaner times.

8. High prices or cheap products:

Customers want to know that they are getting a good deal for their money. Many start-up business owners price their products or services too high to compensate for slow business. Small businesses have to compete with the big box stores that can offer low prices because of their high volume. Owners need to sell or offer high quality goods or services at a reasonable price.

9. Lack of knowledge of rules and regulations:

Fines and temporary shut downs can be a huge drain on a business. Business owners should avoid these by making themselves knowledgeable of the laws and regulations of the city and state, and to be sure that they are always in compliance.

10. Hunter mentality:

A major pitfall to avoid is going for the quick sale without thought of future sales. This hunter mentality can cause a business to fail. Businesses must cultivate relationships with their clients, much as a farmer cultivates a field, concerned with not only the current need, but also the needs for the future.

Although these ten items are not the only reason that businesses fail, many fall into these traps, which can be a step on the way to failure. Being aware of these common mistakes can empower an owner and give the knowledge needed to run a successful business.

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