SBDC Template

Understanding Major Pitfalls

Lack of experience
Attend seminars, take courses in small business management, acquire and use information contained in books and pamphlets, use consultants and other professionals, talk with small business owners. Be aware of your limitations and strive to turn them into strengths. Focus on success.

Lack of money
Put together a well-thought-out business plan and get outside help with it. Be conservative in your projections of income and liberal in estimating expenses. Listen to your accountant and your banker. Strive for quality. PLAN, PLAN, and PLAN again. Review the Colorado Business Resource Book.

The wrong location
It is said that there are three critical factors in a retail business- location, location, and location. Use Bureau of Census data as well as information on traffic count from your state highway department.

Inventory management

Analyze turnover constantly. Don’t over buy. Find out what customers want. Use a computer for a perpetual inventory count. Sell off slow-moving stock.

Too much capital in fixed assets
Examine the merits of leasing as opposed to buying. Subcontract items that you can’t produce economically. Stick to your business plan regarding fixed asset purchases. Analyze and justify all new purchases from a profit standpoint. Watch the tendency to buy too soon.

Poor credit practices
Don’t give credit unless you have to. Use bank credit cards. Screen new credit applications carefully. Limit open credit purchases. Manage and age your receivables.

Taking too much for yourself
Don’t get greedy and don’t use the checkbook balance as any indication of your solvency. Plan your salary like any other expense and stick to it.

Unplanned expansion
Use your business plan as a forecast. Fight the natural tendency to grow as fast as you think demand is pushing you. Get good advice on capital requirements for planned expansion.

Having the wrong attitude
 
The right attitude is to serve others first. By that, you will serve yourself. Secondly, you must see yourself as a success in your venture.