"The number one pitfall I see over and over is that the owner does not pay enough attention to the financial side of the business. Many owners seem to feel that as long as there is cash in the bank, they are doing well, and they don't look beyond that. These are the owners that are usually surprised when they go to the bank to get financing and find out that they are not doing as well as they thought, or may be surprised at the end of the year that they did much better than they thought and are scrambling to come up with the money to pay their taxes. The lack of attention to financial details can also encourage the not-so-honest employee to take advantage of their employer and find ways to steal money or other assets from the company. Finally, it is very difficult to position a company as a competitor in the marketplace if the owner does not have a good feel for the pricing structure needed to stay competitive, yet still cover their costs and generate a good return."

— Inga Arendt

"When the business starts to make money, I think many small business owners don't know what to do with it. They may hoard it, or on the flip side, start taking too much money out. So many small business owners don't make the time and financial commitment to get professional advice about how to invest in growth and profitability for the long term. By exploring better ways to do things, and hiring the people that can help them get these things done, the business will be more stable and successful for the long term. Business owners need to make the investments of time and other resources with a clear understanding of how the business will pay for them, and what the return will be."

— Bonnie J. Nagayama

"I practice in a resort area: Steuben County Indiana, the Land of 101 Lakes. The population in our county doubles during the summer. To survive, businesses that serve the general population must save the extra money they make in the summer to carry them through the winter. Businesses that fail to do this often run out of money in December or January, and aren't able to service their debt or pay the rent. If they turn to credit to survive, they often find they've incurred higher interest rates on credit cards, and many late fees, which makes it harder to save the money they'll need for next winter. My advice is this: If you have a seasonal demand in your business (this is certainly true in my business), be sure to project your cash needs for the slow times and be sure you have funds available to cover ongoing expenses during those times, or have negotiated a line of credit to carry you through."

— Ruth Gitzendanner

"When first starting out, business owners tend to undercharge for what they sell. There are likely two reasons for this.

"First, they don't know how to correctly set an effective price because they don't have the information at hand that they need to make an informed decision. Of course, you need to know as much as you can about the market in which you're operating, including customers, competitors, suppliers, and the economy in general. But don't forget that you also have to have a clear view of the economics of your own business, including what I call the "burn rate," or your true monthly fixed overhead costs. If set up correctly, your QuickBooks accounting system can produce this information and provide you with this and other critical insights that will help insure that your pricing supports your businesses expenses.

"Second, many business owners think they need to have the lowest price in order to get business. Not so. This logic not only can result in low profits and poor cash flow, but can ultimately lead to the early demise of an otherwise viable business. While your competitors' pricing is an obvious piece of the puzzle, don't make the mistake of ending your research there. Learn all you can about the universe that your customers (both existing and potential) live in. For example, are there any unique challenges or opportunities they are currently experiencing? Then think about how your business can meet these needs, set itself apart from the competition and charge a fair price at the same time."

— Leslie Capachietti

"The most common problem I see with my small business clients is that they try to do it all themselves. In the beginning, this is how it's inevitably going to be, when a limited budget means that staff and important outside resources are luxuries. But as the business grows, you cannot continue to do all tasks. There will come a point when you become inefficient, and won't have enough time to complete everything in a timely manner or in sufficient detail. Adding staff — either full time or on a per diem basis — will no doubt increase your costs, but you'll be surprised at how much time you'll save. You'll free yourself up to do what you do best: getting new business in the door."

— Leslie Capachietti

"Most small business owners are great at the 'doing' side of the business, but not as strong on the business side. Finding and utilizing good advisors from the legal, accounting, banking, and insurance fields will usually result in benefits far outweighing their costs. In many cases, correcting issues that were not handled properly in the first place costs much more than paying for the advice and services of the experts up front. My advice is to take advantage of the resources available to you. You won't regret it."

— Inga Arendt

"I know this may sound a bit self-serving coming from a QuickBooks ProAdvisor whose practice specializes in helping small business owners get the most from the software, but honestly, I've seen so many owners either make the wrong decision about their businesses-simply because these decisions were based on incorrect financial information-or postpone important strategic decisions because they know that the numbers they're seeing from their accounting system are somehow not correct. Don't go it alone! If you're unsure about how to set up QuickBooks, get help early on and save yourself the time, expense, and anxiety of having to unravel months or even years of bad accounting/bookkeeping habits."

— Leslie Capachietti

"As a colleague once told me, 'A business with no marketing is like waving 'Hello' in the dark: You know what you're doing, but no one else does!'

"I've observed many small businesses treat the cost of marketing as an unnecessary expense, while others have spent indiscriminately on advertising with poor results. There are many ways to promote your business on a small budget; it's just a case of being inventive and creative. For example, attend as many local networking events as you can (and bring your business cards), offer to contribute a column to your local newspaper or Chamber of Commerce publications, or send out press releases. And be creative. For example, in my own market, we've started a monthly small business-networking event at our local Starbucks®, with the help and support of that store manager.

"Whatever you do, don't assume that your potential customers know you're in business. They won't know unless you tell them."

— Leslie Capachietti

"Don't shy away from doing what it takes to improve your business. If you're not sure what to do, you've got to be willing to ask for, and more importantly, to take advice from others.

"I've often seen small business owners hire consultants to come in and tell them how to improve their business, and then not follow through on the advice, or avoid doing what needs to be done by coming up with reasons why the advice won't work. That's not to say you should take outside advice at face value. Rather, ask questions and engage in discussions with trusted advisors to develop solutions. Taking ownership and taking action when the going gets rough will enable you to follow through with great results."

— Bonnie J. Nagayama

"High employee turnover is costly, both emotionally and monetarily. But many small business owners don't take the time to really think through the specific jobs they need to hire for, or to define the skills they need from the employees they hire to do them.

"First, consider the specific jobs you need an employee to do and the tools they have to use. Pinpoint the skills required and decide if they go together well. For instance, doing detail work and answering a busy phone can be like oil and water: Frequent interruptions and distractions can cause even the best employee to make more mistakes. Yet, lots of business owners hire one employee to do both those jobs.

"The interview process is another important part of hiring an employee. I have seen so many interviewers that either talk the majority of the time, or say something like 'This job involves so and so...You can do that, right?' Nothing could damage the interview process more!

"Ask open-ended questions: 'Tell me about your previous daily duties; tell me how you handled certain situations; tell me about the employees you liked working with the most, or least; tell me about the best bosses you worked for — or which ones pushed your buttons.' The interviewee's answers will tell you whether they are a good fit for your organization and job. And don't forget to schedule enough time. Don't risk having to cut off the interview before you've gotten the information you need to make a decision."

— Chuck Vigeant

"Some business owners have the attitude that their employees are good for one thing only: to increase the business owner's wealth. That's a recipe for bad relations. If you're going to hire employees, adopt the attitude — and make it clear to your employees — that if everyone works together, you'll all share the rewards. Granted, the owner is taking on the risk and providing the leadership, so the employee share of the reward is less, but this attitude builds a committed team. And a team can achieve more than the business owner alone might have ever imagined."

— Bonnie J. Nagayama

"Employees need to know what they're expected to do, where they stand, and have guidelines that their performance can be gauged against. Listing out the job duties in writing before you start interviewing is a good start. That list will serve first as an interviewing tool, then as a training guide for your new employee, and later as an outline for you to review performance."

— Chuck Vigeant

"The IRS is NOT the creditor to skip paying. If you fail to pay your payroll taxes on time, you can incur huge penalties. I urge all my clients to be careful about late payments or filings. I've seen small businesses choose to pay another creditor over the IRS to get stock they need in the short term. And it's true, it may take months — or even years — before the IRS decides to collect the unpaid payroll taxes. But when it does, the costs can be considerable. Penalties add up quickly. If you are more than a year late filing and paying, you may end up owing almost as much in penalties and interest as the original tax amount. The IRS has great powers to collect. If you owe trust funds (amounts withheld from employees' paychecks) the liability cannot be forgiven, even in bankruptcy. The IRS can shut down your business and sell off your assets in order to get their money."

— Ruth Gitzendanner