Common Mistakes Made by Small Business Owners

You've spent many agonizing hours thinking about opening your own small business. You've considered whether your business is suitable for the small or home office environment, and you've done a lot of soul searching, trying to decide if you have the discipline and organizational skills it takes to be successful on your own. You've been enticed by the opportunity to get started with not a lot of cash, to be more available to your family, and to make your living free from office politics and soul-grinding commutes. Good for you. You've taken a big step toward the freedom of work-life integration. There are still a lot of hazards along your path, though. What follows is a brief description of some of the common ones.

You Don't Have Enough Money In my law practice, I'm often called upon to advise those people thinking of starting their own small business, and this is the most common mistake. While starting a small business, especially from your home, involves much lower start-up costs than opening a business through the traditional model, there are still costs. Perhaps the most important costs are your costs of living. When you leave the security of the j-o-b, you need to make sure you have money to make ends meet until your new business starts producing. Do an honest assessment of your needs and your resources, and don't put the full burden of supporting yourself and your family on your new business until that business is ready to handle the burden.

You Have Too Much Money Oddly enough, this is also a very common problem. Many people starting their first small business have prepared economically for years, and feel prepared to dive in head first. Because they feel flush with cash, they buy all the best equipment, commit themselves to projects that aren't as profitable, and try to solve any problem by throwing money at that problem. It won't work. It is great to have that cushion, put it is no substitute for fiscal responsibility and paying close attention to the details of your business.

Failure to Brand Many people, when they begin a small business, approach it with a casual attitude that makes me cringe. Yes, I know you started your own shop because you didn't want formality and bureaucracy. Great. But your business still must be identifiable as a business, rather than appearing to be something you do between the morning news and the evening sitcoms. Advertise. Invest in quality business cards, letterhead, marketing materials. Treat it like a real business, and it will be one. Give it a life of its own.

But Not Too Much Yes, you are running an office, but it can't be too much like the corporate environment you slaved away in for years. Some new business owners regulate themselves too strictly, in an attempt to benefit from those elusive qualities, discipline and organization. When, it becomes too uncomfortable, though, it negates a lot of the benefits you were looking for when you decided to go it alone. I have a client who actually purchased a time clock, and actually punches himself in every morning. At that point you haven't started a business; you've merely created your own job.

There are of course many other things that can go wrong. But if you are on the lookout for these four traps, you stand a much better chance of being happy, and successful, in your new endeavor.

Learn more about this author, Timothy M. Murphy.
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