5 Things to Avoid to Make Your Startup a Success

By Stefanie Neyland, SMB Content Developer at BizLaunch Media Inc.

Successful small business owners are both dreamers and pessimists; like many things in life, you should expect the best but plan for the worst. While the numbers vary by country and region, approximately half of all new small businesses fail within the first three years of operation. Therefore, it’s important that entrepreneurs understand and address the pitfalls common to small businesses. After all, simply understanding the basics may help your venture from becoming just another statistic.


  1. A bad business plan (or no business plan at all)

A business plan is an essential component to organizing your company—from outlining your ideas to determining how you will work on a day-to-day basis. Failing to invest the time and brainpower to fully research and map out your business is a surefire way to start off on the wrong foot. Once you’ve launched your venture business decisions are made on a reactive basis, but if you have the time to spare before opening your doors, use it to build a solid plan.


  1. Poor cash flow

Believe it or not, initially, cash flow is more important than profitability. Even a trickle of cash in and out of the business will allow an entrepreneur to survive those critical early years. Poor cash flow usually results from over-estimating revenues and under-estimating expenses.


  1. Not enough startup funds

It always costs more to launch a new venture than anticipated. Hidden development costs, unforeseen problems or just poor planning can create severe money shortages in a business. Research and calculate an exact startup budget, combining one-time capital costs and six months’ worth of operating costs. As well, exclude sales projections—that way, any money that comes in is a bonus.


  1. Lack of industry experience

Some entrepreneurs pursue a business in an industry that’s completely unfamiliar to them. Choose a business that you know something about and learn the aspects you don’t—you’re more likely to succeed in a venture that holds your passion and reflects your background. It takes a lot of work to run any type of business; you’re responsible for a multitude of tasks, and many of them are bound to be unfamiliar. Therefore, it just makes sense to reduce the number of things you don’t know anything about by entering an industry you do know something about.


  1. Biting off more than you can chew

As a startup, you’ve likely learned how much work it takes to run a small business. Doing the books, running to and from the bank, making sales, filing paperwork, keeping customers happy, fixing the computer—multitasking may sound varied and fun at first, but add up those long self-employed hours and you’ll risk burnout. Remember: your most valuable business asset is you. Be good to yourself by putting a cap on how much work you do, and then, over time, concentrate on building a business which is able to function without you. Set realistic expectations for business growth over a number of years, avoid taking on too much responsibility at once and try to delegate non-essential tasks to employees, suppliers or freelancers.

By Andrew Patricio

March 25, 2015