1. Having too high an expectation

When starting your own small business it is important to make honest and realistic forecasts about your business’ potential. During the startup phase of any business and even once established, it can be very easy to make poor estimations. It’s important to remember one thing however, these are estimations and unless you’re extremely good at what you do or are very lucky, estimations remain calculated guesses. There is no easy solution to this common startup mistake, you simply have to calculate and calculate again until you are ready to take the plunge. Another possible solution is to let a third party review your expectations, perhaps an accountant, solicitor or business consultant. It’s usually a good idea to have a third party view of your small business matters.

2. Poor planning

The amount of startup businesses that simply do not plan is startling. It is a common misconception that startup businesses only need a loose plan in order to get started, this is incorrect. Poor planning (or no planning at all in some cases) will more than likely result in business failure, if not immediately, within a few months. You must produce a high-quality and structured business plan for your new startup venture. A business plan not only outlines the aim, objectives and structure of your business, it will also aid securing external sources of finance such as startup loans. A business plan will help you foresee potential problem areas in your business and measure how well your business is doing on a regular basis.

3. Poor market research

A lot of small business mistakes stem from a lack of market research. The market your small business is going to operate in is your sales venue, it is your home, your marketplace for the next X-XX years, you have to treat it as the holy grail. Inaccurate or poor market research will all most certainly lead to a misunderstanding of your businesses objectives and how you are going to successfully execute them. Put the time into market research, don’t walk into business blind of your surroundings.

4. Diversifying into new markets too soon

Your new startup business is quickly becoming a success and you are looking to expand into other markets to open up new revenue streams and increase overall profits. Well, not so fast cowboy! - There may well be a temptation to diversify into other markets when you have a taste for success, but don’t forget your roots. If you move at the wrong time (normally too quickly) your primary revenue stream can be left behind. Expansion is a necessary and extremely important step for small business owners, but diversifying too quickly can make you vulnerable to the many startup business risks.

5. Losing sight of net profits

When we talk about business growth, we normally associate this with increased profitability - Well, not always. Over-trading and chasing increased sales volume is a rapid expansion tactic but it also has its associated risks, and some of them can be catastrophic for your startup business. Unless you have adequate working capital or net current assets, chasing high sales revenue before thinking about profit is a dangerous game to play - Don’t be caught out, business takes time to come to fruition!