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Mistakes Small Business Must Avoid

Published February 03, 2020

Question: I understand that many start-up businesses fail in the first two years. Can you offer insights as to why and how to avoid the most common mistakes?

Answer: There are a number of pitfalls to avoid and roadblock to overcome. However, the main reason so many entrepreneurs fail is inadequate capitalization. A critical piece of your business plan is determining start-up expenses and ongoing monthly expenses until you reach the break-even point.

Unless you do your homework and know, with a reasonable degree of certainty, how much you need to begin operations you will fail. Unless you project both expected income and monthly operating expenses you will fail. A good budgeting rule of thumb is to be conservative on the income side and liberal on the expense side. If you follow this rule your surprises will be of a positive nature.

While borrowed money may be an answer, it also contributes to the monthly outgo. Ideally you fund your business with monies you have saved over time. In addition to financial considerations, there are several others you need to be aware of and try to avoid:

Burnout – Do not try to wear too many hats. Plan to grow your business by doing what you do best and delegate or outsource the many back-office duties to others who can accomplish them in half the time it would take you.

Large Accounts – Avoid having all your eggs in one basket. It is far, far better to spread the risk by having multiple small and medium sized accounts and not be dependent on a few large customers that can cripple you if they leave.

Collections – Wherever possible request payment at point of sale. If you must extend credit, secure a down payment, age and monitor your accounts receivables. Make sure your customers understand and agree to your payment policy. Remember a sale is not final until you have received all monies owed.

Competition & Changing Trends –. While it is important to secure new accounts, never take for granted your current customers. Be aware your competition is lurking in the shadows. We live in a changing world and what’s trendy today may change tomorrow. Stay alert to changing tastes and be the first to offer them.

In conclusion, you do not have to go it alone. There are a number of resources available without charge. Your local SCORE business counselor can assist you in developing a viable business and marketing plan.


Gray Poehler is a volunteer with SCORE Naples and can be reached at Business counseling is available, without charge, from the Naples Chapter of SCORE. Call (239) 430-0081 or visit The SCORE business office is located at 900 Goodlette Road North, in the Fifth Third branch bank building. Office hours are 9 a.m. to noon, Monday through Friday.

1165 Herndon Parkway, Suite 100
Naples, FL 34102
(239) 430-0081

Copyright © 2023 SCORE Association,

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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