Running a small business is certainly a challenge. Most fail in the first five years and half of the remainder are often gone after ten. There are many reasons for this and not enough room to list them all here. But there are some common ones you can avoid by thinking less like a business owner and more like a customer.

Mistake #1: Thinking Everyone Is Like You

Inexperienced business owners often assume that customers are just clones of them. They think that since they opened a hardware store that every customer must like the same TV shows, listen to the same radio stations and read the same newspapers as they do.

So the first mistake they make is spending — or should I say wasting — advertising dollars in the wrong place because the demographic of the ideal customer might be the exact opposite of the business owner. Get to know your customers. Ask them what they like and how they found you. Give them a discount for filling out a survey to help you define them more accurately. This small device will save you big ad bucks.

Mistake #2: Know Your Financials

When you go to the doctor he or she checks your “vital signs.” Pulse, blood pressure, listens to your heart, thumps you all over, and from those procedures he or she gets an educated guess about your health status.
Your business has the same vital signs. It’s called your “financial position.” It consists of your profit and loss statement, income statement, inventory, payroll and others. A good accountant will save you way more than they cost in the long run. Spend the money early to get help setting up and learning how to read your financial condition. Poor money management is one of the major causes of business failure.

Mistake #3 Not Knowing Where To Find Help

There has never been a time in my lifetime where there is more free help available to today’s small business owner. Free online computer classes, your local Small Business Development Center, SCORE, your local B.E.A.R. (Business Expansion And Retention) program and the SBA (Small Business Administration). All have online business plan outlines, sample plans, teaching webinars and more to help you get your small business off the ground and keep it running.

Mistake #4: Stuff Happens

I realize the common word is not “stuff” that happens but the point is that bad things are going to occur at some time during the early development of your business. The big question is — will you be, or are you, prepared for those bad things. Have a cash cushion, a line of credit established, and good insurance. Putting a good policies and procedures manual in place will go a long way to weathering tough times.

Some Final Thoughts

There is no substitute for good planning and preparation. Even if you don’t plan to borrow to start your business I still suggest a written business plan. It forces you to write down how you are going to do things. If you can’t put those thoughts in words then you are going to have a much harder, longer road to success.

Look for people who are successfully and profitably doing what you want to do and do what they do. Learn about your industry. If you spend just 20 minutes a day reading something about your industry within a year you’ll know more than 75 percent of the people in that industry. Knowledge is power.

Check out Tom’s Weekly Radio show at http://kmmsam.com Every Saturday Noon to 2 PM Mountain Time – Follow Tom on Facebook at facebook.com/smalltownmarketing and on Twitter @smalltownmarket