There are some people that will tell you that 40% to 60% of small businesses fail within the first five years. Interestingly enough, this is quite far off from the real statistics in Australia which reflect a failure rate of only 6.2%. This brings us to the first pitfall to avoid:

Pitfall 1 - Believing every Opinion

In business you need to be selective of which voices you listen to. Many people think they know a lot about business, but their circumstances or perspectives could be very different from yours. Some people are naturally more risk adverse or negative in their outlook. Those are not the people that you want to surround yourself with when starting a new business. The voices you should listen to are business mentors, people that are experienced entrepreneurs who want to see you succeed and who will encourage you and provide you with sound advice.

Pitfall 2 – Applying Corporate Strategies

The corporate world is very different from running a small business. Corporations have vast resources compared to entrepreneurs. Corporate strategies most often simply do not work for small businesses. The strategies you should be applying should be specific to your business and your industry. If there aren’t resources available from your local small business chamber, search online. There are many small business forums where you can get valuable strategies and input.

Pitfall 3 – Failing to Focus on Selling to Customers

The fun part of starting a new business is creating products and services and developing marketing strategies. However, if you are not selling your products you won’t have a business for very long. In the early stages forget about branding and looking all professional. Rather, focus on selling to customers.

Pitfall 4 – Failing to Manage Cash Flow

When playing a game of tennis you need to constantly watch the ball. The same applies to small business. Cash flow is possibly one of the single most important aspects of small business success. You must know how much income you need to cover your expenses, when that income will come in and when you need to pay your suppliers. A good small business accountant will be able to help you set up a good cash flow management system.  

Pitfall 5 – Failing to take advantage of Technology

Technology is the one tool that has most effectively levelled the playing fields between small and large businesses. Think about it. It used to be only large multinational corporations that could land international contracts. Yet today with the internet small service providers can have clients from all over the world. In addition, being an entrepreneur can be stressful when you try to do everything yourself. Technology provides you with resources to help you set up automated systems, outsource work more affordably, and market yourself internationally.

Starting a small business can be as scary as it is exciting. Avoiding these pitfalls can help you to create the successful business you’ve dreamt of.