Common Mistakes Small Businesses Make

Q: Now that I’ve gotten through the startup phase, what are some of the most frequent mistakes made by small business owners?


A: Our SCORE counselors talk to small business owners from time to time who may be struggling for a variety of poor decisions they may have made. While the list is long, the following are a few of the more common and serious mistakes we see.

People usually start with enough money to open the door, but often not enough to keep the door open. Their customers are happy, sales are growing, and they may even have broken even. Then that unexpected expenditure appears or a large inventory invoice or tax payment comes due, but there’s no money in the bank! Things snow ball from there and the business is in real trouble. The bank won’t lend them more funds, vendors won’t extend credit or a big customer won’t or can’t pay his invoice on time. They needed more contingency in their working capital budget at startup.

Sometimes, they stop planning. In particular, they don’t continue doing the kind of market research they did before they started up. So something in their environment starts changing and they are not aware of it. Their competition adjusts to the change before they do and takes the advantage. Our business environment is always changing and we need to frequently reassess where we are and where we are going to stay on the right track.

Why do they stop planning? Often it’s because they spend so much time running their business that they can’t find time to manage their business. They are so deeply involved in the operations they can’t see the future. Small business owners need to set aside specific time to attend to the management functions that keep their businesses running smoothly.

Sometimes the owner burns out and the business starts deteriorating. Owners can spend an enormous amount of time and energy starting and running a small business. This can take a heavy toll on the owners. Owners need to take time to relax and enjoy family and friends to recharge those business batteries.

And then they don’t seek timely advice. Small business owners need trusted advisors or mentors. They need someone to provide them objective opinions, someone they can bounce ideas off of. Family and friends may not always provide that unbiased opinion. Your advisors might include your attorney, accountant, banker or SCORE counselor. And keep your mentors informed so they can provide timely advice when needed.