Succeed by NOT Failing!

8/14/2019 Succeed by NOT Failing!

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Succeed By

Not Failing!

Learn the 50 mostcommon reasons

businesses fail and

how to avoid them

Ed Martin

MicroBiz Made Simple
http://microbizmadesimple.com/http://microbizmadesimple.com/


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Succeed By Not Failing!

Copyright 2009 Ed Martin

All rights reserved. This book may not be reproduced, in whole or in part, in any

form or by any means electronic or mechanical, including photocopying, recording

or by any information storage and retrieval system now known or hereafter

invented, without written permission from the author, Ed Martin.

LIMIT OF LIABILITY AND DISCLAIMER:

This manual is based on personal experience and is designed to provide

information about the subject matter covered. Every effort has been made to makeit as complete and accurate as possible. However, there may be mistakes both

typographical and in content. Website URL's and content can change overnight

so if you click through to a site and it's not there, please contact the author so that it

can be corrected.

The author shall have neither liability nor responsibility to any person or entity

with respect to any loss or damage caused or alleged to be caused directly or

indirectly by the information covered in this manual.

TRADEMARKS:

Any trademarks, service marks, product names or named features are assumed to

be the property of their respective owners, and are used for reference only.

MicroBiz Made Simple 2


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Table of ContentsIntroduction......................................................................................................................................5

Start-Up............................................................................................................................................71. You start a business for the wrong reasons..............................................................7

2. You mistake your business for a hobby...................................................................7

3. You leap before looking...........................................................................................84. You don't know your business well enough............................................................9

5. You're going to get rich quick..................................................................................9

6. You have a bad business model.............................................................................107. You have a poor business plan...............................................................................10

8. You don't have the right amount of money to start................................................119. You run out of money............................................................................................1110. You have a bad location........................................................................................12

Marketing and Sales.......................................................................................................................13

11. You underestimate the competition......................................................................13

12. You don't know the market...................................................................................1313. You don't have a niche..........................................................................................14

14. You don't market and promote your business effectively.....................................15

15. You don't have a website......................................................................................1516. You have a bad website........................................................................................15

17. You put all your eggs in one basket......................................................................16

18. Your don't know how to sell.................................................................................1619. You don't have a Unique Selling Proposition.......................................................16

20. You don't know the worth of what you're selling.................................................17

21. You have unreliable suppliers...............................................................................17

Customers......................................................................................................................................1822. You have poor customer service...........................................................................18

23. You can't say no....................................................................................................18

People.............................................................................................................................................2024. You don't have a team...........................................................................................20

25. You don't have the right number of employees....................................................20

26. You don't hire the right people..............................................................................21

Money............................................................................................................................................2227. You have too much debt.......................................................................................22

28. You don't manage cash flow well.........................................................................22

29. You don't have enough cash reserves...................................................................2230. You don't generate cash flow early enough..........................................................23

31. You have too much money tied up in fixed assets................................................23



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32. You're too cheap...................................................................................................24Management...................................................................................................................................25

33. You have poor management skills........................................................................25

34. You don't act like the owner.................................................................................2535. You have poor recordkeeping...............................................................................26

36. You over-expanded...............................................................................................26

37. You procrastinate..................................................................................................2638. You can't decide who is in charge.........................................................................27

39. You get distracted.................................................................................................27

40. You're disorganized..............................................................................................28

41. You don't plan for success....................................................................................2842. You don't have an exit strategy.............................................................................28

Entrepreneurship............................................................................................................................30

43. You quit too soon..................................................................................................3044. You get too excited...............................................................................................30

45. You are over-confident.........................................................................................30

46. You don't have any business sense.......................................................................3147. You don't change with the times...........................................................................31

48. You don't have passion.........................................................................................31

49. You burn out.........................................................................................................32

50. You don't believe..................................................................................................32Good luck!.....................................................................................................................................33



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Introduction

It's fine to celebrate success but it is more important to heed the lessons of failure.Bill Gates

Starting a new business is risky. New businesses, especially small and

microbusinesses, fail at an alarming rate. The SBA estimates you have less than a

40% chance of surviving more than a few years. The odds are even more against

you starting a business that becomes truly profitable. Surprisingly, of the 80% of

new businesses that failed, over 60% were profitable when they went under!

Why does this happen? Why do so many businesses, even those making money,

fail? Why do they not live up to their potential when they could have succeeded?

The main reason is that people starting a new business don't know the most

common pitfalls that cause small businesses to fail. It is only common sense that if

you can learn what caused other businesses to fail you can increase your odds for

success. What's more, other people's mistakes don't cost you a cent!

I've put together a list of the 50 most common reasons new and young businesses

fail. The list is based on my experience with success and failure, from talking to

other new and experienced entrepreneurs, and from observing the findings of

others. It is a remarkable list. I think every success story is different, but failures

can be grouped together. There are common threads in their stories. Patterns

emerge. I've grouped the pitfalls into common themes covering marketing,management, finances and planning.

If you can learn to recognize these pitfalls you can avoid them. This is especially



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important before you start your business. It is much better to learn why other

businesses failed and plan to succeed before you start your venture than it is to try

to solve problems once you are up and running. It's just too hard, too expensive and

too late by then. Learn from businesses that have shut down. Study the problems

that caused them to fail and increase your own likelihood for success.

I've learned that mistakes can often be as good a teacher as success.

Jack Welch



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The problem is that their new business never gets beyond the hobby stage. You can

pick up and drop a hobby whenever you feel like it. You can go off on tangents,

and make decisions on a whim. You can't do that with a business. It requires much

more effort. You need to work seriously and focus on generating revenue with abusiness instead of spending money on a hobby.

3. You leap before looking

People are often so anxious to try out their idea for starting a business that they

don't think about what it really will take to fulfill their dream. Before you make the

leap, sit down and do a self-assessment. Make a list of the things you love to do. It

doesnt matter what they are just put them in the list.

Make a list of your skills and capabilities, things you can do, and things you know

how to do well. Make a list of the things you have done.

Make a list of your personality traits. Take a test if you need help. They are easy to

find online.

Consider all of these things before you make the leap:

What do you want to achieve?

How much money do you want to make?

Where to you want to work? Anywhere, at home in your pajamas? In your

own office or store? On Main street or the beach?

How much and long do you want to work? Do you see yourself putting in 2

hour days or working 80 hour weeks?

Are you really ready to give up the steady income and security of your job and risk

the time and money that will go into starting a business? If not, then dont go full-

time yet. Find an extra hour or two a day. Do some moonlighting and see how that

goes.

Think about your personality. Consider these questions:

Do you want to be famous, in demand? A local move & shaker or an

Internet celebrity?

Are you a people person? Do you look forward to interacting with



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customers? Do you need to be around people to get your creative juices

going?

Do you like working alone?

Can you handle distractions if you work at home or do you need your ownspace?

Do you have a 9-5 work mentality and like to leave things at the office?

Do you have confidence in yourself and what you are doing to stand up to

competition and get through hard times?

Are you flexible enough to change your plan if things go wrong or new

opportunities arise?

Think hard about the answers to these questions so that you chose a business path

that is right for you.

4. You don't know your business well enough

People start ventures all the time without really understanding the business they are

getting into. Sometimes they have an idea and are passionate about it, but don't

really know how to translate that idea into a real business. Other times they see

someone else succeed with an idea and try to copy it without really understanding

all of the working parts of the business. Problems appear when these people have

to make decisions about suppliers, pricing, and marketing because they don't really

understand what they are selling or the business they are in. Nor can they get goodhelp because they can't judge prospective employees' qualifications.

Make sure you do understand as much as you can about the business you are

starting and the product or service you are selling. New franchisees often get the

chance to work in an existing franchise so they can learn about the business for a

good reason. Take time to become an expert in your business before you have to

make the critical decisions that can make or break your venture.

5. You're going to get rich quick

There is no shortage of get rich quick schemes online and off that lure people intostarting a business without any real hope of success. If someone is offering you a

sure-fire money making business idea, run away! Do some investigating to see if

anyone has made any money following that business model. If it sounds too good

to be true, it almost certainly is.



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6. You have a bad business model

People often are so convinced their idea will work that they don't do any research

to see if there is really a need for it. Then are they stunned when no one wants tobuy their product or service. Spend some time on market research to see that there

is a demand for what you are selling. If you think you are meeting a special need,

then make sure there really is a niche market for you and that it is big enough to let

your business succeed. If you find out the market is not there before you start, all

you are out is some time. If you wait until your business is up and running to find

out you've got no market you are out your business. Doing market research won't

guarantee success, but it can help you avoid failure.

If your business can't make money, it doesn't matter how much planning you've

done or how well you execute your plan. You will fail. If your business won't makemoney until year three, but you need it to support you in year two, you've got a big

problem. People starting a business often get so caught up in the excitement of the

planning and the start-up that they forget about this central question, "How will

your business make money?" Do your homework before you start.

7. You have a poor business plan

Many people think they can start and run their business on the fly and then make

up for not planning by using quick thinking and being flexible. Not a good idea for

most. Successful small businesses don't just happen. They occur because of wellthought out and executed business plans.

Just having a plan isn't enough. You can have a beautifully bound, full color 100

page business plan that guarantees your business will fail, just as you can have a

single page plan that will steer you towards success. It isn't important what your

plan looks like. All that matters is what went into preparing it. Banks and other

investors might prefer the 100 page glossy version to the single pager, but in truth

they really just want proof that you have a viable business model with a real

market and a way to exploit it.

Just blindly filling out a business plan template that gets tossed into a drawer isn'tmuch good either. You need a plan that you can follow. Your plan forces you to

take a hard look at your financing and marketing, at the competition, at the market

place, and at your sales strategy. It gets you do think about your short and long

term goals and how your business can reach them. It gets you thinking about



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problems that could arise and how you will solve them.

Make your plan a living document, something lean green. Make it something you

can and do update regularly and you'll have a powerful tool to guide your businessto success.

8. You don't have the right amount of money to start

Small business owners often underestimate the amount of money or capital they

need to start their business. Sure, you can start your business, especially an online

business, on a shoestring, but problems come when you need to expand or have

unexpected costs, or it takes longer than expected to generate cash and profits.

Your business can easily end up on life-support because it needs more capital to

survive, and you can find yourself in tough spot because your business isn't giving

you the profit you expected.

To avoid this, before you start your business, figure out how much it will cost to

operate it once it is up and running. Make a list of all the expenses you'll have:

marketing, advertising, rent, online expenses, office supplies, professional fees all

of your day to day costs. Be thorough and don't underestimate your costs. Next

estimate how long it will take to get your cash flow going to meet these expenses

and to generate profit. Be careful not to overestimate how quickly this will

happen. Inexperienced entrepreneurs are often too optimistic predicting when they

will see a profit. Plan to have enough capital to start your business based on thoseestimates.

Don't go overboard though. Just plan for what you need. If you have borrowed too

much you'll end up paying interest on money you don't need. If it is your own

money, you aren't using it for better purposes and getting a better return. Plus, with

excess capital in your business you might be tempted to spend it on things you

don't need and fail to keep a close watch on costs. Strike a balance to get just the

right amount of money for your startup.

9. You run out of money

Don't forget to figure out how much money you need to live on while your

business is getting started. If you don't have a cushion to live on, you need to

figure out how you're going to pay the bills. You can't just assume it will all work

out.



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Start saving money and cutting expenses to build your bankroll before you start

your business. Consider taking on a part time job to pay the bills, or start your

business on the side while you still have your day job. It is a tragedy when owners

have to abandon a growing business because they can't cover their living expenses.

10. You have a bad location

Location, location, location. Many businesses are tempted by cheap leases and set

up shop in the wrong place, and then never get going. What makes a good

location? Start off by forgetting about price. Think about where your customers

and employees are, how much competition in the form of similar businesses is

around, what kind of accessibility there is by highways, public transportation and

on foot, what parking and lighting are like, what the condition of the building is,

how well your business fits into the neighborhood ,and how it will be received. Seeif there are any incentives or tax breaks for opening a business in the area. Then

you can start to look at price. You still might have to make compromise on cost or

other criteria, but you can do it after weighing all the options. A good location can

save a struggling business and a bad location can kill a good business so choose

wisely.

The same sort of thing applies for online business location. Get a domain name and

URL with your business name in it. Make sure it is memorable, easy to spell and

easy to type. When you are looking for a host for your website, don't go crazy with

extra bells and whistles. If you just need a simple site, then don't overspend.

If you work at home, make sure you've got a good set-up where you can work

without interruptions. If you need to see customers at home, make sure you have a

professional looking office and that you don't have any zoning or covenant

restrictions.



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Marketing and Sales

You can't sell anything to anybody if they don't know you are there. Too manybusiness owners minimize the importance of getting their message out and

promoting their business. If you're not marketing and promoting your business,

you're likely to fail. You also have to remember that you are not alone in the

marketplace. You have competition. They won't just sit back and watch you take

business from them.

Wise men learn by other mens mistakes, fools by their own.H.G. Brown

11. You underestimate the competition

One of the main reasons people start a businesses is because they think they can

beat the competition that is out there already. But your competitors, even the fat

and happy ones, aren't going to sit quietly and watch you take away their business.

They will respond. What's more they have their own plans for keeping their

customers loyal and winning new business. And they might well be smarter than

you are.

So don't get so wrapped up in running your own business that you forget to watch

the competition. Too many businesses fail to react to changes their competitors

make. They forget that competitors want to succeed as much as they do and willwork just as hard to win. You might even learn from what your competitors are up

to.

12. You don't know the market

Don't assume that just because you've got a great business idea that there is a

guaranteed demand for it. Don't forget that customers have minds of their own.

They might not agree with you. Customers go where they can get the best value for

their money.

New business owners often don't bother to see if there really is a market for their

product or service, and if so, will people pay the price they want to sell it for. You

must make sure that you are solving a problem or meeting a need at a fair value or

you won't have any customers.



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Do some research. Do some test marketing if you can. This doesn't have to be

complicated or expensive research. Do a survey. Talk to suppliers and potential

customers. Look at what the competition is doing. Talk to people in a similar

business or to people in the same business but in a different, non-competing area.See if they are successful. See how well similar products or services are selling.

Focus on what customers are looking for and what need is not being met.

Remember, starting a business isn't just about you doing something you love. Its

about your customers and meeting their needs. No customer = no business.

Don't forget that you have to keep studying the market, doing market research and

tracking customers even after you have been in business for a while. Markets

change. Customer needs evolve. Forgetting to keep up can undo all the success

you've earned so far.

13. You don't have a niche

You want to sell to the biggest market you can possibly get right? Sell to everyone,

everywhere. Why limit yourself? Sounds great. Just one thing, it doesn't work well

When you try to compete with big businesses in the open market you'll lose. They

have more money and resources to spend. You can't take them on head to head.

Even with no competition you just dont have the resources to go after everyone in

a broad target market. This is true for online businesses as well.

So instead, don't compete with the big guys head on. Don't try to be all things to all

people. Focus the resources you do have on a niche, which is nothing more than a

specific, smaller part of the total market. For example instead of trying to sell an

accounting program to everyone in business you gear your marketing effort

towards people with home businesses, or maybe even a smaller niche like people

with home child care services.

You can compete against the big boys in these smaller markets and become the go-

to resource for a niche. Because niche markets are small, you can reach your target

market, customize your message for them and customize what you offer to meettheir needs without breaking the bank. You can be seen by members of the niche

market as their best option because you are there with them. You understand their

needs and deliver what they want.



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14. You don't market and promote your business effectively

Customer's can't buy from you if they don't know you are there. They won't come

looking for you. And all too often they don't know you are there because you're notdoing effective marketing and promotion. Marketing isn't really all that hard. There

are basic, well proven methods for getting your message to your customers through

advertising and promotion, and even plenty of ways to promote your business for

free. If you don't know anything about marketing get help from someone who does,

and plan to start learning as much as you can.

Marketing is even more important for online businesses who have to constantly

promote their sites or be lost in all the clutter on the web.

Online or off, if you get so wrapped up in the daily operations of your business that

you don't spend time on marketing you can soon find yourself with no business tooperate.

15. You don't have a website

Really, is there any reason not to have one? If you don't have one you are going to

be losing out to competitors who do.

16. You have a bad website

Just having a website isn't enough. It has to be one that meets the needs of your

business as well as the needs of your customers.

It should make your business look good. It should be professional looking and easy

to use. It should let your customers learn about your business and the products or

services you offer. It should tell readers how to find you, with contact info or site

location. It should also tell them how they can buy from you. For many businesses

the website is the only form of contact you have with customers, so you want to

make it as easy as you can for buyers to make a purchase.

You also have to be careful that you don't go overboard. A great website won't turn

a bad business idea into a winner. Nor should you spend a lot of time and money inbuilding a site so fancy that your basic story gets lost and customers get distracted

or lose interest. More design and graphics is seldom better.



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17. You put all your eggs in one basket

Many small businesses are built around just one product or service, or have just

one big client who generates most or even all of their revenue. It is easy to workthat way and many businesses find success, but disaster is always right around the

corner. If that customer goes away or the demand for the product disappears you're

in trouble.

If you are dependent on one customer you don't want to risk losing them by dealing

with a competitor, but they might not have the same loyalty towards you. You are

probably just a small fish for them and they have their own business needs. That

doesn't mean you can sit be idly. You should always look for ways to diversify the

products and services that you offer, and be on the look out for ways to expand

your customer base. Have a backup plan just in case something does happen andyou lose your customer or market.

18. Your don't know how to sell

Many businesses can get potential customers but aren't successful at converting

them into actual buyers. There are several ways to address this. First, if you don't

understand the basics of negotiating and selling, it's time to learn. Second, if what

you are doing doesn't work, try a different selling technique. Third, listen to your

potential, past and current customers about why they are not buying from you. Set

up a feedback mechanism or ask them. Maybe it isn't really how you are selling butwhat you offer. Maybe the customer is looking for something else or your message

isn't clear. Find out so you can sharpen your sales effort. If you need help, get it.

19. You don't have a Unique Selling Proposition

Your Unique Sales Proposition (USP) is what sets you apart from your competition

and motivates buyers to act. Many businesses don't think about or come up with

this proposition. They don't have a message that promises any great value or

benefit to the customer. There is nothing unique or distinct in what they offer. The

message is just "buy from us" because we're here. It's no wonder customers will gosomewhere else.

You can come up with your USP. It should let your prospective customers know

why they should buy from you instead of someone else. It should tell them that no

one else offers what you have. It should explain that if a customer buys from you



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they will get a certain benefit. It should be so compelling it gets potential

customers to become buyers.

Think about what you offer: a unique benefit, incredible prices or selection, extragood service, expert advice, or a fantastic guarantee. Make a list of what makes

your business great and work from there. Whittle your list down to until you have a

clearly defined message that your customers can take and act on.

Your USP should be part of all your marketing, advertising and sales efforts. It

should be what customers remember when they think about your business. Just

make sure you actually can deliver on it!

20. You don't know the worth of what you're selling

Setting the right price for your product or service is one of the most important

decisions you have to make. You have to pick one that your customers are willing

to pay and that produces a profit for you.

A prime cause for business failure is to not include in the price everything that

goes into the cost of an item. Also, mess up on the cost/sales volume ratio and you

can find yourself going under quickly. If your customer perceives a higher value

for what you are selling than you are willing to charge, you leave money on the

table. If they perceive a lower value, then you are not making sales.

If you are offering a service you need to have clients, but dont sell yourself shortto get business. Study the market and where you fit into it. Find out what others

are charging for similar work. Check with other people to see what they are

charging or talk to prospective clients about what they paid for past projects. You

might need to price lower when starting out in order to win projects, but always

know what the going market price is.

21. You have unreliable suppliers

You can't sell what you don't have. Take time to build a good relationship with

your suppliers, but if one of them flakes out on you, look for a new one fast.



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Customers

It's easy to forget that customers change. Few businesses can survive with a sell itand forget about them policy. You can't have a business without customers.

Ignoring their wants and needs is another common and fatal mistake.

Mistakes are the portals of discovery.James Joyce

22. You have poor customer service

Good customer service is one of the biggest advantages small businesses have over

the Wal-Marts of the world. Mess that up and you lose one of your strongest

selling points.

Once you have customers, you have to keep them. You have to earn their loyalty.

After the sale don't just forget about that customer in the rush to get the next one.

Remember, it is always easier and cheaper to sell to an existing customer than to

find a new one.

Pay attention to what the customer wants and needs. Give them a feedback

mechanism. Talk to them. If a customer calls or emails with questions, get back to

them right away. If you have employees, make sure they all understand the

importance of customer service, but also give them support when dealing withcustomers. It's also better to keep employees happy than have to replace them.

For a small business, one disgruntled customer can cause big problems, so keep

discussions cordial and professional. Try to find a win-win solution to problems

and complaints. Don't fall into thinking that the customer is always right they

aren't. When you reach the point with a customer that they are causing too much

trouble, you have to decide if you want to keep doing business with them. If they

are costing you too much time and money and are disrupting your staff maybe it is

time to say you don't want their business any more. Of course if it is your biggest

customer and he's a jerk, then you might want to work things out.

23. You can't say no

Sometimes you have to be able to say no to customers. No, you cant meet that

changed deadline, or no you cant just add another 20% more work to the project



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for the same price. You need to know when to take a stand and when to be flexible.

It is the art of the negotiator. Learn it or you'll end up doing a lot of work for free.



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People

Successful entrepreneurs understand their own strength and weaknesses. They seethe potential in opportunities, in themselves and in others while the less successful

are blind to this. Those who succeed are able to influence those around them and to

delegate responsibility to others. Many business failures are caused by the owner

trying to do too much, getting bogged down in details and losing the big picture.

Successful business owners know when they need help and find people to give it

so they can focus on the things they do best.

Learn from the mistakes of others. You cant live long enough to make them all

yourself.

Eleanor Roosevelt

24. You don't have a team

If you are too busy focusing on the day to day tasks of running your business you

won't have time to look ahead and think about big picture. That is a recipe for

failure. It is false savings to think you should do everything yourself. Successful

businesses, even solo operators, use other people's time and money to grow their

business. Spend your time where you can have the most effect and build a team to

help you with the rest.

If you are not a good copy-writer or designer, don't be afraid to farm that work out.

Need a website but not sure you can design one that will to the job? Hire someone.

There are people who can do jobs fast, well and for a good price, so use them.

Your team can include employees as well as people you work with or people you

turn to for advice. Put together a good one to help build your business and improve

your prosperity.

25. You don't have the right number of employees

If you have employees, they will be one of your biggest expenses, so make sureyou have the right number of them. Too many means bored, underworked

employees and extra cost to you. Too few means overworked and unhappy

employees, and performance will suffer. Its not easy to work out the right number,

but it will be worth it in terms of expenses to the business and employee happiness



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and productivity.

26. You don't hire the right people

It's a big step for a small business to hire an employee One that you can't afford to

mess up. If a big company makes one hiring mistake they'll survive. One hiring

mistake in a small business with only a couple of employees can be a disaster.

Take your time in selecting an employee. Find one who is a good fit for you. Make

sure you and your business are a good fit for them. You will be a team so you need

to be compatible and have complementary skills.

Make sure potential employees understand what they will be doing. In small

businesses employees often wear many hats and do different jobs. Some people

love that, but it doesn't work for others, especially if they are coming from thecorporate world where job titles and functions are more narrowly defined. If you

need a jack of all trades, let new hires know that up front. Make sure they know

there is no staff support to make the coffee, do the copying or answer the phone in

a small business as well.

If you do have an employee that isn't working out, then don't let the situation drag

on. It costs you money and disrupts the business. But before taking action, check

to see what the law where you are says about firing an employee. Do it the right

way.



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Money

Money plays a huge role in the success or failure of your business. Moneyproblems can happen at any time and for a variety of reasons. Not starting out with

enough money and bad cash management are common causes for business failures.

Since money is so important to your business keep close track of it. Know where

and how it comes and goes or you might end up with none at all.

Wise men profit more from fools than fools from wise men; for the wise men shun

the mistakes of fools, but fools do not imitate the successes of the wise.Cato the Elder

27. You have too much debtA common trait of businesses that fail is that they have too much debt. They get

into trouble because they underestimate their costs when starting out and

overestimate their revenues. They end up spending too much at the start and can't

cover expenses later, before they start to generate cash. Don't let your debt spiral

beyond your means to repay it.

28. You don't manage cash flow well

Businesses, even profitable ones, can get into trouble because they don't manage

their cash flow right. You can be profitable, but not have cash on hand to pay youremployees, suppliers or rent if it is all tied up in inventory and accounts receivables

because your customers haven't paid you yet. That's why it is important to keep

close track of the money and when it comes in and goes out. Collect your

receivables as soon as you can. Better yet, try to get paid in cash without credit.

Try to pay your bills as late as you can. Think about using just in time planning for

inventory get only as much as you need and only when you need it. That requires

careful and accurate planning, but can give big rewards in your cash position.

Watch your expenses like a hawk. If you are locked into a certain selling price

because of the competition or the market, one way to improve your bottom line andcash flow is to mange your costs.

29. You don't have enough cash reserves

Businesses fail because they don't have sufficient cash reserves when problems



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arise. Business owners tend to overestimate how fast sales will come. They don't

plan for surprises like big energy or material cost spikes, strikes, problems with

suppliers, or natural disasters. When these things happen or when sales are slow

you need to rely on your cash reserves. If you don't have enough you are in bigtrouble.

You can avoid this common pitfall by knowing how much money you'll need to

keep your business going through tough or slow times and then building your cash

reserves to cover expenses for a few months at the very least. This also means you

can't be pulling money out of the business too soon. You need those reserves.

When business owners do run out of money they often turn to the funding sources

they used when starting up their business. For many that means tapping their credit

cards again, pulling money out of their house, or trying to get a loan from family, abank or a private investor. They run the risk of burning up those funds and now

they are on the hook if something goes wrong and the creditors come calling.

30. You don't generate cash flow early enough

For some businesses there can be quite a delay from the time when the product

idea was formed until it is developed, tested, launched and starts to bring in some

revenue. Even a service can go through a lengthy development and launch phase.

What does your business do for cash in the meantime so you stay afloat? Consider

selling a simpler or a beta version of your product or service until the final versionis ready. Look for some other work you can take on from someone else. Do some

freelance or outsourced projects to generate some cash. Consider what other

products or services you could resell. This work might not be what you really want

to do and might not make a lot of money, but it can bring in cash that you need to

keep your business running in its early days.

31. You have too much money tied up in fixed assets

Don't fall into the trap of investing so much money in fixed assets like machinery,

land, buildings, installations, vehicles, or technology that you do not have enoughmoney left over to operate your business. Look for less expensive alternatives to

these fixed assets like used equipment or less expensive locations. You can always

upgrade later if you need to.



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32. You're too cheap

Don't confuse being cheap with saving money. The price you pay for something

doesn't always reflect its true cost. If it will save you money and time and producea better result to hire someone to do a job, then doing it yourself on the cheap is a

mistake. Don't waste your time on low level tasks if you could be doing better

things. On the other hand, don't buy something just because it is cheap. Get what

you need to do the job right. If it costs more but does a better job, then its a better

buy.



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Management

Management skills are vital for a successful business. Once you start up a businessyou have to keep it running and growing. You can't afford to slip up here and hope

to succeed.Many failures come from business owners not having experience

managing a business and not getting help when they need it.

I don't want to make the wrong mistake

Yogi Berra

33. You have poor management skills

One of the most commonly cited reasons for business failure is bad management.

Business owners are able to launch their business, but once it is up and running

they lack the experience and expertise in finance, purchasing, sales, marketing,

production or hiring employees that is needed to make their business work.

Business owners who don't take time to get this business expertise or who can't

hire experts to help them won't make it. You have to educate yourself. Read. Go

online. Talk to people who are running a business. Hire a coach. Take classes.

Consider it an investment in the future success of your business.

A successful manager knows that a successful business can't be left on auto-pilot.

She is able to plan for the future and to make decisions to deal with problems and

opportunities as they arise. She knows she has to give attention to the market,competition and customers. She is able to hire good people and then to train them

and give them responsibilities. Business owners without business and management

skills won't be owners for long.

34. You don't act like the owner

Even if they have the business skills, a lot of small business owners don't want to

do any of that management stuff. They want to work on making the product or

providing the service, or doing only what they like to work on instead of being a

manger. You can 't just focus on the fun stuff. The success of your business isgoing to depend on how well you can manage your entire business, not just the

parts of it you like.



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35. You have poor recordkeeping

You need to have some knowledge of bookkeeping and accounting so that you

understand what is happening with accounts payable and receivable and withexpenses and incomes. This helps tell you what is happening with your business.

You also need to keep records, file tax returns, make scheduled payments and do

other filings. The government frowns on missed tax payments and filings, and

when they do catch up with you it will be expensive and time consuming.

You are much better off if you put in a good accounting and record keeping system

from the start instead of trying to come back later and playing catch-up. You can

find software that will help you. If you don't know anything about this and don't

want to learn, find someone who can help. The more you understand about your

business, the better job you can do making decisions and running it.

36. You over-expanded

You can wreck a profitable business by trying to grow too fast too soon. Past

success doesn't guarantee that you can rush out new products, add new facilities or

employees or go into new markets.

Some businesses owners want to grow their business as fast as they can so they can

calm worried investors or attract new ones. Sometimes the problem is that the

business itself has grown unexpectedly and the owner does not have any plans to

expand to meet the new increased need. He ends up scrambling to catch up. Thisrush to expand has caused many businesses to fail because they become financially

overextended and can't meet their obligations.

A better approach is to slow down. Every business grows at its own pace. You

don't want to stifle growth, but you do want to do it smartly and for good reasons

based on research and analysis. Not being able to keep up with customer demand is

a good reason to expand. You want to be able to say you opened a second store is

not. Make sure you have a good customer base and cash flow situation. Once

you've done your homework you can identify the areas that call for growth and

expand wisely.37. You procrastinate

There are plenty of tasks in managing a business that aren't much fun. Everyone

has their own list, and those are the tasks that usually get put off and off and off.



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Those tasks are often pretty important, too. Nobody taxes or paperwork or making

cold calls, but you still need to do them. Put off enough critical tasks and you can

kill your business.

You have to take charge of your time so you don't spend it all on the fun stuff.

Prioritize your tasks so do the critical work first. If there are tasks you just can't do,

hire someone to do them for you. If you are just plain lousy at time management,

get someone to help you or take a class to learn it.

38. You can't decide who is in charge

In a solo business you are in charge no doubt, but as a business grows you can't

always take a hands-on approach to managing the whole business. You can have so

much responsibility and authority you can't get anything done. You become abottleneck. If you aren't there to make decisions or take actions nothing gets done.

You have to start to delegate. Let others begin to take responsibility and make

decisions.

Of course you can go too far and delegate so much that you don't know what is

going on in your own business. Then you have a problem if an employee or a

consultant leaves and you don't know what they've been doing. So delegate but still

keep tabs on what is happening.

39. You get distracted

What's one of the biggest distractions in businesses today? Email and surfing the

web. It is so easy to start your morning reading email and then moving over to the

web for a while that all of a sudden half the day is gone before you get to work. Its

the same thing for watching TV if you work at home, or fooling around in the shop

or talking with your buddies. How productive are you when you spend half your

time fooling around?

So, turn off the TV, stay away from the web and email if you don't need them and

focus on what you need to do. Make a plan with set tasks. Check during the day

how you are doing in meeting them. Limit yourself to short breaks. Check youremail at lunch and the end of the day. It'll still be there waiting for you.

The same thing goes for the big picture. You need to have the same degree of

focus when it comes to what projects you work on. Select one business idea and

work on it. Don't move on to something else until you are done. You'll wear



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yourself out going off in too many directions at once and end up accomplishing

nothing.

40. You're disorganized

Do you thrive on chaos and frenzy? Are you one of those people who has notes

and lists everywhere on little scraps of paper and stickies? Is your desk or office a

mess? Have your own special filing system? Can't find the tool you need because

you didn't put it away? Get organized. Your business needs better. Get your

records in order. Make a schedule. Put everything away. You'll save time and

energy, get more done and be able to find something when you need it.

41. You don't plan for success

Plenty of small and microbusinesses are started with no plans for what to do if they

become a success. Occasionally a business takes off far beyond the dreams of the

owners leaving them in a quandary. They didn't plan for great success and maybe

even don't want it because it will take more work to manage the growing business

than they can or want to do. What then? Sell the business? Try to keep going at the

old level? Consider adding a partner or hiring a manager to take on the extra load?

The point here is that sometimes lightning does strike and businesses do take off,

catching their owners by surprise. Think ahead about what you will do with your

business if it is a great success.

42. You don't have an exit strategy

You can't go on running your business forever. Plans change, you are ready to

retire and your family doesn't want to take over, or maybe you need the cash. How

do you get out of the business you have created? How do you get the best price,

especially if you are your business's main asset or you are having a fire sale?

Maybe it is easier to just close up shop and sell off your assets?

Obviously the worst time to sell is when you need to, and best time to sell is when

all is going well. The most important thing you can do is to plan ahead. Make sureyour records are in good order and that you can show buyers exactly what they are

buying. Include your customers and suppliers in your talk. Highlight your cash

flow and growth history and potential. If you have special knowledge, are you

willing to pass that along? If you have employees, are they going to stay and help



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in the transition?

The truth is that your business is only worth someone will pay for it, all together or

in pieces. Try to run your business as if it is always for sale. Think about what apotential buyer would view as more valuable and pay a higher price for when you

make decisions for your business. Plan your exit strategy when you are starting a

business, not when you need to leave it, and you'll get more for it in the end.



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Entrepreneurship

Successful entrepreneurs share some common traits. They're driven by the idea tomake their dreams come true. They are doers, not watchers. They see problems as

opportunities. They are optimists, but they are also realistic in setting goals. They

take risks, but are do it intelligently. They do make plenty of mistakes, but learn

from them for the next time. You don't have to be a great entrepreneur to run a

business, but it helps to learn from them.

The successful person makes a habit of doing what the failing person doesn't do.Thomas Edison

43. You quit too soon

Give it some time. Many people are serial business starters, especially with online

businesses where it is so easy to start a business. If an idea doesn't take off from

don't walk away quickly. Think about tweaking your approach and try something

different. Or, maybe just be patient.

44. You get too excited

Entrepreneurs are constantly coming up with ideas for starting a new business or

expanding an existing one. That is a great trait, but it can leave you with nothing

done if you get too excited and chase after them all at the same time or just keep

jumping from one idea to another. Nor can you get so excited by a new idea that

you don't take time to find out if it will really work before you start to implement

it. You need to slow down, do some research and then focus on those that have a

chance of working.

How do you know if your latest idea is a sure winner? Test it. See if it is worth

pursuing as a startup. If you already have a business, see how your new idea fits in

with what you're doing now. Compare it with your current business plan and goals.

If it doesn't fit, file it away for later. Focus on developing the idea you are workingon now before moving on to the next.

45. You are over-confident

Confidence is a trait that all successful entrepreneurs share. They are sure their



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idea will work. That's great! You need to have confidence, but watch out for

becoming so sure of yourself that you lose touch with what is going on. Don't just

follow your instincts blindly. Take a look around. Not every idea is a winner and

even the most successful entrepreneurs have failures in their past. If people aretelling you your idea is crazy, you don't have to believe them... but it doesn't hurt to

take a listen. They might have a point or two in their favor.

46. You don't have any business sense

Some people can come up with great ideas but have no clue about how to carry

them out or how to run a business. Many artists and other creative people produce

works that would be in demand but they have no idea how to bring them to the

market place. If that is you, get some help. Learn business fundamentals yourself.

If you can't, find someone who does know how to run a business to help out.

47. You don't change with the times

Nothing stays the same. In fact, the only constant in business is change. Customer

interests and needs change. Competitors enter and leave the market, make new

plans, and offer new products and services. New technologies come and go.

Successful businesses have a plan, but they also stay flexible. They respond to new

opportunities and adapt to difficult times. Business owners have to be ready to

learn new skills and take on new roles in order to survive. Do regularbrainstorming sessions to come up with new ideas for your business. The

occasional change keeps you fresh and your customers interested.

48. You don't have passion

Start a business that you are passionate about. Do something that you love doing.

That passion will see you through long hours and obstacles and can give you an

advantage over someone who starts a business just for the money. When you are

passionate you're willing to do a little something more for a customer, to put in that

extra hour at the end of the day. It will help you inspire your employees to shareyour passion for the business. You care and it shows to the people you work with,

and to your customers. Plus it is just more fun to do something you like to do!



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49. You burn out

It takes long hours and hard work to own a business. Working at home or own your

own doesn't make it easier. Long days with no weekends or days off will start totake a toll on you, your family and yes, even your business. If you go too hard you

can start to lose your edge. You become less effective and lose the joy of doing

what prompted you to start the business in the first place. Set aside some free time

during the day. Take a day off regularly. Your business will benefit from it and so

will you.

50. You don't believe

Entrepreneurs succeed because they have faith. The believe in what they are doing

and that they will succeed. Think you will fail and you probably will. Positiveattitude can overcome many obstacles and shortcomings, especially when it is

worked in with some business knowledge and hard work. If you need to do attitude

realignment, get with people who are succeeding. Find a coach. Get a little help

and motivation and see how much better you do.



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Good luck!

There is one last factor that can play a big part in deciding if your business willsucceed or fail, and that is plain old luck. Just being in the right place at the right

time has let many businesses take off. On the other hand, you can do everything

right and still not succeed because of some bad break. Your business could burn

down, you could get sick or a flood wipes you out.

You can 't control your luck one way or the other, but you can improve your odds

for achieving success regardless of what happens by avoiding all the common

pitfalls listed here. If the path to success is filled with potholes, go around them.

Take positive steps. Plan and prepare for the best and the worst. Most business

failures are preventable when you know about them. Learn as much as you can

from those who have gone before you and don't be afraid to take action. You'll

increase your chances for success and have more fun running a successful

business!

Do not learn from your mistakes, learn from the mistakes of others so that you do

not make any.Sean Karsten

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