by Meredith Davises

Created on: September 02, 2009   Last Updated: April 15, 2010

Mistakes made by small business owners begins with money matters. Follow up a good business idea with a sound financial plan. From beginning to end, map it out. Do your homework and research the global market. Small business owners need not look at large companies as competition because the competition is other small businesses.

Taking a jump-start with a loan, inheritance, or small windfall is reckless. Some of the start up capital needs to be an investment made by the owner even if it is just $20. Money coming directly out of the owner’s pocket funds an independent business. Demanding loans compromise success. Critical financial blunders occur stemming from personal loans from family and friends obligated with personal advice.

Carry a loan as an expense on your financial records. An inheritance or small windfall is an investment income and operating assets. You do not want to leave a zero balance in capital when you are starting your business. Capital will not take care of itself and it will destroy your business if you neglect it. Count capital as a major priority.

Other mistakes evolve around the location of your business. Logical to locate your business in a high traffic district but if the customers are not there for your business, the high traffic is useless. Decide who buys your product or service and locate in an area convenient for them to find you. Providing an athletic shoe store next to a gym might seem like a good idea but people are not coming there to buy shoes. A ski resort makes more money renting skis than selling them because people do not go there to buy skis.

Your business has to be competitive to meet the needs of your customers who are making comparisons and purchases. Selling at lower prices attracts some customers but not those who want to spend a little more. Your prices have to be competitive. You can go down on your prices but you cannot go up once you have advertised your prices. A shrewd business owner will carry competitively priced merchandise on the floor and has a small stock of more expensive and less expensive products in the storeroom so that they can make sells rather than lose business.

Enlist the services of a reliable advertising agency. Get the word out promptly and effectively. Advertising will be crucial especially when the business first opens. If you choose a shop or restaurant that closed for a lengthy period, people have become accustom to seeing the vacant business. Make some ingenuity to change their minds.

Grand opening specials hurt a small business. Patrons coming for the freebies are not buying. Customers, wise to business trends, will mark a date for business failure and return for marked down clearance sales. Likewise, a business that is generating more income from fashion fads, phase trends, and toy whims will have trouble marketing other products lines. Market your business and offer savings to your preferred customers.

Failure to follow and comply with honest business ethics and denial of business failure are common concerns of a small business. Have your business evaluated annually to limit expectations and exceed potential. The practice of inadequate staffing or over staffing creates problems. The owner’s participation in the business becomes a problem with either too little or too much. Decide partnership roles before creating the business to avoid conflicting and compromising business standards and performance.

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