by Charles Simmins

Created on: February 20, 2009   Last Updated: May 21, 2009

The management mistakes that a larger business may survive will ruin a small business. A larger business often has resources or access to resources that a small business does not. Avoiding common management mistakes may mean the difference between success and failure in a small business.

Governmental regulations are the first pitfall for small business managers. Short of cash or short of time, it is very tempting to put off complying with the burdens imposed by governments at all levels. It may be something as simple as a city certificate of occupancy for your rental property or remitting withheld payroll taxes to the IRS. The temptation to postpone paperwork or payment may be overwhelming but the penalty is far more so. The government will come in and shut down the business, and the company may not be able to survive that.

Another management mistake that is deadly in a small business is to fail to manage employees. In a company with 10,000 employees, one or two bad apples cannot do much damage. In a company with five employees, those same two bad apples will wreck the business. A lazy employee, one that steals, or one that just hates people including your customers will hurt a small business in a faster, costlier manner.

A third management mistake in small business is one that also happens in large companies. Management makes the assumption that the "good times" will always exist. Cash flow is great. Sales are going through the roof. Banks are beating down the door to lend money. An economic downturn, either locally or nationally, can end those good times. Big business can rely on the various levels of government to try support their financial struggles. A small business just fails.

Small business managers often once worked in big businesses. This is the origin of another common small business mistake. Pay and other forms of compensation in big business do not translate to the same levels in small business. Managers who expect the same compensation from a small business that they would have received from a big business will drain cash from the small business at an alarming rate.

The failure to plan is another management mistake common to small businesses. Business planning can be deferred or ignored for years in some cases, but it cannot be avoided. At some point the small business will face a challenge where the manager cannot just "wing it". Key employees quit or die. Suppliers go out of business. Buildings burn down. Banks call loans.

Big business makes the same common management mistakes as small businesses do. They have the resources to survive. Common management mistakes in small businesses cause them to fail.

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