5 Common Business Pitfalls and How to Avoid Them

If you’re an aspiring entrepreneur, you’ve been told dozens of times that most startups fail within the first five years. But, no one has told you why.

At least one of these reasons is the main culprit behind the demise of every failed startup. Luckily, all of them are preventable.

Small businesses are vulnerable. Whether or not a business will succeed, depends on the person in charge. Only by identifying the most common pitfalls in time, you’ll be able to avoid them.

Not Using the Right Tools

High tech has made life easier more than we could have imagined just a few decades ago. There are countless tools available. You’re doing your business a grave injustice if you’re not employing the right tools.


Instead of employing a full-time accountant and paying them a full-time wage, you could employ accounting software that is specifically designed for small and mid-sized businesses.

The right tools will do the work for you, allowing you to devote your time to paramount tasks. No matter what your industry is, chances are, technological innovations change the way you do business every year.

Don’t allow yourself the luxury of being out of the loop. Now that you have the option to sync data across multiple platforms, you’re able to save time and money, and thus make better use of your employees and resources. The fact that most software and platforms offer free trials allows you to constantly explore new options and experiment with them until you find the right ones for your business.


Many a startup fails because it relies too much on one single thing. Perhaps it’s a very talented employee, a highly valuable customer, or even an environmental factor that allows you to enjoy success.

Workers quit. Customers come and go. The environment changes. If you are overly dependent on one thing, you’re setting up your company for failure. To avoid that, level out the playing field.

Hiring Friends and Family

Unless you’re running a family business with a century-long tradition, you’re better off seeing your cousins at Thanksgiving dinners – not at company premises. Your family and friends have their own lives, priorities, and outlooks.

Establishing a business partnership with your pals is difficult because you already have a personal connection set up. Again, if you’ve already done it and it works, then great, you should keep at it. Otherwise, don’t do it. There’s a big chance it will lead to constant headaches.


Instead, current colleagues, business associates, or other kinds of acquaintances make for much better candidates. You can still work with someone you know personally and be an affable partner without any emotional hang-ups.

Poor Funding

Startups need money. A lot of it. Most entrepreneurs pay for everything out of their pockets – also known as bootstrapping. Bootstrapping has its advantages, but many opt for it just because they are not well acquainted with the market psychology and are oblivious to other viable options.

Bootstrapping can back your company again te wall quite fast. It’s best to go with a more balanced approach. To provide a safety cushion for your company, utilize external funding in a responsible manner.

Monitor your cash flow in order to keep a handle on your capital situation. Don’t avoid making cuts when the situation calls for it. Monitor your expenses closely. Insufficient capital is the biggest threat in the earliest stages of growth.

If your finances are healthy, take out a business credit card. Even if you don’t need a loan now, you never know what lies ahead. By using it and paying your credit card dues in time, you’ll maintain a healthy credit score.

And, if the time comes for a loan (chances are it will), you’ll be on with the people who have to sign off on that loan. In case you need emergency funds, you’ll want to have quick, viable solutions.

Poor Growth Rate

If you’re reading that as “not growing fast enough,” you already might be in trouble. A poor growth rate doesn’t translate to a slow growth rate because even growing too fast can become a problem.

Growing too fast can leave you with overworked employees, demands that are too high, and customer complaints related to inconsistent experiences. Growing too slow, on the other hand, can leave you in a situation where you’re spending lots of money without enough revenue or customers to back it up.

It’s key to identify what factors dictate the growth rate of your startup. To determine that, work with every department of your company. Moreover, work even closer with your HR department and marketing team. For instance, studies show that customer success is tied to a healthy growth rate.


Entrepreneurship is an adventure rife with booby traps. Remember, you’re not the first one to walk down that path. Learn from the mistakes of others. By doing what you can to manage these most dangerous risks, you’ll set yourself up for success.

Useful Resource: What You Can Add to Your Business

Salman Zafar

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