It is difficult to say what percentage of small businesses fail in the first year of operation and what percentage survive at least five years. Everywhere you look, you can find different statistics based on different methodologies of calculation. What is certain, however, is that Veterans in business tend to stay in business longer than non-Veterans. The skills and strengths that Veterans gain during service in the military apply themselves directly to success in entrepreneurship. Even Veteran entrepreneurs, however, must avoid the common pitfalls and blunders that cause small businesses to fail. Do you know what the ten most common entrepreneurial mistakes are? Read on to find out what mistakes you want to avoid and how to do so!

Mistake #1: Poor Operational Management

Most small businesses fail because the owner fails to properly manage the employees, operations, and company as a whole. Some tips for avoiding this mistake:

:: Hire some help if you need it!

Even though you are the cog in your business wheel, learn how to share work and delegate responsibilities. This will allow you to grow as a company and not be overwhelmed by success!

:: Pay attention to your employees!

The key to a successful business is training a motivated staff and maintaining a positive working environment. Successfully managing your employees will boost morale and increase profits!

:: Keep the big picture in sight!

Entrepreneurs often get caught up in the exciting parts of their business. They enjoy creating new products and coming up with ideas, but forget about the minute tasks, such as bill-paying and paperwork that are necessary for their business to run. Always keep an eye on the big picture. You are not just an entrepreneur—you are in business!

Mistake #2: No Business Plan

Another major mistake entrepreneurs make is failing to thoroughly research their business idea and make sure their idea is viable. To avoid this common pitfall:

:: Do your homework ahead of time!

Many entrepreneurs get so caught up in the excitement of starting their own business, they fail to properly research their idea and do the necessary work before opening shop. A comprehensive business plan developed through research will demonstrate your idea’s viability and give your company focus from the very beginning!

Mistake #3: Miscalculated Market

Just because you have a need for napkins that glow in the dark doesn’t mean that everyone does. Many entrepreneurs miscalculate their market size, making plans based solely upon their instincts rather than including market analysis and research during the development stage. To better estimate the size of your potential market:

:: Research your customers and calculate conservatively!

Knowing who your customers are will give you a better sense of how many there are, but this doesn’t equal your market share. Most companies sell to less than one percent of their potential market. In other words, if your research demonstrates that 500,000 people would have a need for glow-in-the-dark napkins, you should plan to sell to 1% of that market, which is only 5,000 people. Looking at your market realistically is another way to test the viability of your idea.

:: Create a thorough marketing plan!

Once you know the size of your target market, creating an accurate marketing plan is much simpler. In addition to including how you will market (advertising, word of mouth, etc.) and how much you plan to spend on marketing, a good marketing plan should also include your timing into the market and your ease of entry into the market.

Mistake # 4: Weak Sales Plan

Many entrepreneurs don’t realize they need a sales plan to help them track the financial growth and progress of their business. As a result, many business owners over-project their anticipated sales volume. A good entrepreneur will constantly know where business stands. Be on top of your business by following this helpful tip:

:: Make a Sales Scheme!

Create a sales plan that includes where sales will come from, how they will come, from whom, and how often. Map out how much selling is needed daily, weekly, monthly, and quarterly to a) break even, and b) earn a profit. Keeping track of your sales via your Sales Scheme will help you focus on your progress and will help you maintain a realistic viewpoint about your selling capabilities.

:: Account for a slow start!

Even the best products may take a few months to get off the ground. Be sure to account for low sales in both your sales projections and your cost projections for at least the first few months.

Mistake #5: Limited or No Cash Reserve

Many entrepreneurial ventures fail because the entrepreneur made cost projections too low, didn’t have a cash reserve, and lacked a contingency plan. Sometimes the best entrepreneurs fail because of elements outside their control: a competing business might open up across the street; a vendor might strike and leave you without a critical piece to your product; or a heavy rain might flood your office, ruining inventory and leaving you with a financial disaster. The best entrepreneurs know that these things happen, and they overcome them by following these tips:

:: Always have a contingency plan and keep cash in reserve!

Even if you are realistic in your company’s cost projections, make sure you have enough cash to cover the unexpected. Have a plan in case things don’t work out the way you expected.

:: Plan for a few extra months!

When determining your start-up cost projections, it is smart to plan for a few months with zero sales. Chances are low that your business will open up immediately to booming sales, and this will ensure you have enough cash to make it through the rough early period. If sales do pick up quickly, you will be left with a cash reserve for emergencies, unexpected setbacks, and future growth investment.

Mistake #6: Too Much Overhead

Don’t get caught up in the number of people you employ or the volume of your sales. All that matters are your profits! If you want to maximize your profits and avoid taking on too much overhead, follow these simple tips:

:: Be patient!

Don’t jump into hiring employees and buying up office space! Every day companies fail because they underestimated costs, overestimated profits, and took on too many high overhead costs. One day you might need to hire a Vice President of Sales, but not the first day. One day you might be able to afford that premier office space in the center of town, but not the first day. Be realistic in your needs and capabilities. If you did your homework and have researched the viability of your idea, your potential market share, and the timing of your sales, you will have no problem hiring additional employees and expanding to new space as you absolutely need it.

Mistake #7: Ignoring the Truth

Entrepreneurs tend to be extremely self-confident in their abilities. Their creativity leads them to come up with new ideas and products all of the time, but their inclination toward stubbornness often causes them to seek confirmation of their ideas rather than the truth. You can avoid this common mistake, however, if you:

:: Test your products, ideas, and services!

But don’t test them on your family, friends, or anyone who would be tempted to tell you what you want to hear. Ask for honest, objective reviews and listen to them. Don’t be afraid to change an idea, listen to advice, or start over. One of the best qualities of an entrepreneur is persistence, but make sure you know when to let go and listen to others. By doing so, you will better connect with your customers and create a product even more in demand.

Mistake # 8: Friends and Family in the Business

We all know of small, family-run businesses that thrive on customer loyalty and neighborhood friends. In this way, many small businesses are able to survive simply by hiring friends and family to help run the company. When these businesses seek to grow, however, they all share one thing in common: they begin hiring for skill rather than convenience. What can you learn from family businesses that make it big?

:: Hire skilled individuals who can perform the jobs you need!

Many people hire relatives or friends because it is easy to do, but oftentimes they are the wrong individuals for the job. Picking people who do not have the skill-sets required to perform jobs only creates more work for you, and it is difficult to fire friends or family members when they fail to perform. If you want your business to grow, hire skilled people from the start. If you want to hire friends or family members, train them first and make sure they are cut out for the job.

:: Take care with partnerships!

You finally get your business started, and all of your friends want to be partners in the company. They don’t contribute anything to the business, but they want a share of its profits. This is a fast way to failure, and every entrepreneur should be careful about choosing partners. If you decide to share ownership in the company, make sure the person deserves it, will work as hard as you, and has something unique to bring to the table. Taking this step early in your company’s life will avoid hard feelings and resentment later on.

Mistake #9: No Long-Term Aim

A common mistake entrepreneurs make is failing to define a long-term aim for their business. While some entrepreneurs are looking merely for a way to support their family, others are looking to create multi-billion dollar companies. Knowing what you want out of your business will help you assess the strength of your ideas and will keep you focused on your ultimate goal. To avoid this common mistake, follow this helpful tip:

:: Define your business purpose!

Setting the ultimate purpose of your business up front should be a necessary component of developing your business plan. Too often, it is not even part of the original thinking that goes into the company. Defining where you want to go from the start will help you define your ideas, how they are implemented, and how you grow.

Mistake #10: No Exit Strategy

Most entrepreneurs believe the hardest part of owning a business is the start-up. It is easy to think that way when statistics reveal how many businesses don’t survive beyond their first year. What the statistics don’t reveal, however, is how many businesses fail after being in business for several years because they lacked a proper exit strategy. To avoid this, consider the following tip:

:: Create an exit strategy before you even begin!

By creating an exit strategy early in your company’s life, you can shape your business toward its exit. If you plan on selling your business, don’t enter into agreements that would prohibit you from doing so, and make sure your products are up to the standards of companies that would buy your business. If you hope to be in business only a couple of years, don’t sign multi-year contracts and make commitments beyond that time period. And if you hope to pass your business on to your children, train them early on and be sure they are up for the challenge of taking over your company!