5 Entrepreneurial Pitfalls

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"Three months of running a business or trying to set up a business and you will learn, I suspect, as much as you can learn in three years at a business school."- If you own your own business or are starting one, you know exactly what Richard Branson is talking about.  As one of the most recognizable and successful entrepreneurs, Richard Branson has had plenty of experience starting up businesses and has definitely overcome some of the pitfalls associated. He is the owner of the Virgin Brands and is worth more than 5 Billion dollars.  Whether you are the proprietor of a small local business or trying to start an online venture, here are a few of the common mistakes to avoid when starting your own business.  Avoiding these blunders will put you well on your way to success.

1. Lacking Enough Cash

One of the most explicit but yet most widespread pitfalls entrepreneurs fall into relates directly to money.  The experienced agree that cash is king. Lacking enough capital or accumulating too much debt can cripple your best efforts.  Few entrepreneurs correctly anticipate the cash needs of their first year in business and beyond.  Some experts recommend entrepreneurs have approximately three times what they think they'll need starting out.   Additionally, too many business owners fail to invest any earnings back into the business in the fledgling years -- it may take a while before your business is strong enough to withstand a significant withdraw of capital.  Again, money can get in the way of your entrepreneurial dream if you begin racking up too much debt too early into your venture.  Avoid the temptation to max out your credit cards.  It may be difficult to find lines of credit in the beginning, but it will get even more difficult down the road for you if you get up to your eyes in debt and start falling behind on payments.  

2. Failing to Collect Accounts Receivable

You have to have customers to maintain a business.  For a start-up company, this means hitting the pavement to attract customers and let them know you are open for business.  Once you have customers, you want to ensure that you keep the quality ones and lose the flakes.  It is more than possible that some of your new consumers are merely non-soluble castoffs from your competition.  Perhaps they have a history of late payments or not paying at all with Competitor A.  Learn as much as possible about your clients ahead of time to avoid giving away a product for free.  Also, stay ahead when it comes to your accounts receivables and invoices.  Your business needs this money to survive.  Take advantage of the swells of invoicing tools available which make it easier to collect accounts receivables.  Don’t be ‘Mister Nice Guy’ to just any customer who can’t pay at the moment unless they have built strong credibility with you. Doing so will cost you valuable time and resources in the end.

3. Going it Alone

One of the most detrimental business moves entrepreneurs make is alienating the local community.  Your community has bountiful resources for you to take advantage of.  How about a local Chamber of Commerce where, for a small fee, you can be listed on their website to promote your services?  If your local community can’t help you out with resources, try the Internet.  You should be able to find many valuable tools and small business development sites.

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