8 Common Small Business Mistakes and How to Avoid Them

The majority of small businesses fail. I don’t say that with much bravado, but it’s a statistically rooted reality. Seventy-five percent of all startups do not end up in success. That’s a hard pill to swallow for a lot of budding new businesses.

The good news is that many small businesses get it right and make mistakes that can be avoided. Certain consistencies plague new businesses, and I’ve often seen them with the businesses I’ve run and consulted.

The most common mistakes I see in businesses are the same mistakes my friends and family make when they start their own companies. Here are eight of the most common mistakes small businesses make, along with advice on how to avoid them:


It’s extremely important to establish your brand before diving into business. If you don’t have a clear idea of what you stand for, you can’t expect customers to understand it either. Think about who you want to target, what you want customers to think about when they think about your company, and what words describe your company best. Once you have those answers, stick with them. If the changes are minor — welcoming a new partner or product — that’s fine. But if your business direction changes dramatically, you’ll have to re-educate your customers every time (and each time is like starting from scratch).


You may be able to deduct your costs for your office space or storage area for your inventory. But if you don’t adjust these expenses annually for increasing costs, you will overstate your deductions or take a deduction that you aren’t entitled to.

Most businesses need an office. If your annual rent or mortgage payments increase each year due to higher interest rates or rising real estate taxes, you must adjust your deduction each year for the higher amount of rent or mortgage you pay.


The IRS considers meals and entertainment a type of entertainment expense—and according to the IRS, only the cost associated with business entertainment is deductible (the cost of entertaining clients, potential clients, and salespeople). You can deduct only 50 percent of your meal expenses, even though you had 100% business-related meals. For example, if you have a business dinner with a restaurant tab of $100 and $60 is for dinner, and $40 is for drinks and tips, you can deduct only $60 as a meal cost, not the $100 tab.


For example, if you are running a cleaning company in Utah, quality control is extremely important. When you hire subcontractors make sure that they actually show up to your client’s house when scheduled. In a business like cleaning, having a fresh appearance can lead to more customers as well, which leads back to making sure that all of your employees are friendly and arrive on time. That said, Utah Home Cleaners Salt Lake City, should have no problem getting referrals from happy clients, so make sure that you get it right the first time.

This goes for any business, whether you are a full-service hair salon or a freelance graphic designer. Make sure that your customer service is always at the top of its game so that you look like the best option in the area.


For example, if you are running a cleaning company, don’t just advertise that you clean homes. Instead, pinpoint your niche and specialize in cleaning high-end homes. In addition to highlighting your unique value proposition, this specific target market will be naturally more likely to trust your brand because it is focused on their particular needs.

Lesson: If you can’t narrow down the niche for your business, then maybe it’s time to look at a different business opportunity altogether.


Like it or not, price is a key factor in most customer decisions. Yet many small businesses are reluctant to discuss the financial details of their products or services. Why? Because they don’t want to appear greedy? Because they’re afraid of losing business? Small businesses can’t afford to be coy, whatever the reason.


Starting and running a business means constantly being in an uncertain environment. You don’t always know what will happen, who will walk through the door next, or who might be the next big client you get. Have you ever heard someone say, “I could never go into business for myself? I’m just not comfortable with the uncertainty of it all?” The truth is, uncertainty is something all business owners have to deal with.

The challenge is to remain calm, cool, and collected when things aren’t going your way. There will be times when you will not get the results you want, fail to hit your goals, stumble on your way to growth or even lose a customer or employee. In these situations and even if you’re experiencing these things now, you must remain confident in your ability to handle them effectively.

If you don’t believe that you can handle whatever is thrown at you, then others definitely won’t believe it either. Customers and employees need to see that even when things don’t go the way you plan for them to, you can still hold your head high and know that you can adapt to any situation.


The Internet is mobile and social, and you need to be there, too. E-commerce giant Etsy reported that 60% of their traffic comes from mobile users, and 30% of their sales are also generated on mobile devices. If you’re not making your website mobile-friendly, you’re missing out on a lot of potential customers. And if you don’t have a social media presence, that’s another missed opportunity to connect with customers who may not even know about your company. From Facebook and Instagram to Twitter and Pinterest, social media can be a great way to increase your foot traffic by getting the word out about sales or coupons.

Automation tools like Hootsuite can help you manage your presence on multiple networks at once — so all you have to do is post. But don’t stop there — how about setting up Google My Business, or claim your location on Yelp if you’re already on Google My Business? And if you think it’s too much work to keep up with all the latest social networks, think again.

Expand your reach by turning your customers into advocates with platforms like Yelp, Google My Business, TripAdvisor, and more. Earn badges for great reviews and offer incentives to bring people back, such as exclusive offers or contests for liking or reviewing your business.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.