8 Traps That Every Small Business Must Avoid

You know the feeling. You have a great business – or a great business idea – and it looks as if everything is going fine. And then, boom! Suddenly it isn’t. Unexpected events scupper your best laid plans.

It’s not uncommon – research by British commercial insurer RSA suggests that over half of all new businesses don’t survive beyond their first five years.

There are plenty of traps that small businesses have to negotiate to be successful. Here’s our list of eight of the worst, and some tips on avoiding them.

Small business traps

1. Not Having a Business Plan

If your business is small and simple, you may wonder why you need a business plan. That’s something for Apple, or Marks and Spencer! Not true.

A business plan helps you focus on your goals and sets a timescale in which to achieve them. More importantly, it makes sure that you know the parameters you’re working within – your strategy, your goals, your competitive advantages, what sort of financing you’re going to need, your likely outlays and sales projections, and so on.

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If you put all these basics down in writing, you have a great resource to refer to for staying on track, or at least understanding when you’ve gone off track. It also gives you a reference point for analysing where and why things went wrong if events don’t turn out to plan.

2. Doing Too Much Yourself

As a small business owner, it’s very tempting to put yourself at the heart of everything. After all, it’s your baby, your vision and your effort that got the business to where it is. Naturally you want to be involved in every detail.

This sounds fine until you unexpectedly fall ill, or have some other sort of emergency, and suddenly the wheels start to come off.

Every small business owner needs trusted partners and staff who fully understand the business and how it runs. If there are contacts (suppliers, clients, etc) that are vital to the business, make sure that their details are somewhere easily accessible, and that staff know where to find them.

Write down key dates in a planner (along with any relevant associated information) so that everyone knows if an important deadline or event is coming up.

3. Failing to Plan Ahead

One of the easiest traps to fall into is not planning ahead. You’ll often find it difficult to carve out enough time to look forward, but you should – particularly if you’re busy.

Fail to plan and you’ll find yourself facing substantially more unexpected problems than you need to. Short-term events require more detailed planning obviously, but you should have at least a skeleton plan for the year ahead in place so that you can map out future actions appropriately.

4. Ignoring the Small Problems

As every skier knows, if you ignore warning signs long enough, sooner or later you may just fall off a cliff. Part of the skill in running a small business is spotting the early signs of problems before they become a crisis.

It’s all too easy to dismiss genuine red flags as “teething problems”, either because you’re full of optimism, or because you just don’t have the time or inclination to look at what’s going on.

Small business owners have to be pragmatic. You have to be able to look at your company objectively and identify issues as they arise. Ask yourself: is this running as it should, and if not, why not?

Seemingly trivial items demand attention as well. The big stuff won’t happen unless you get the small stuff sorted out and, left to their own devices, those minor items can become very major indeed.

5. Getting Your Capitalisation Wrong

Unless you know your line of business inside out, the chances are that there will be a few financial surprises along the way.

We’re all made one of two ways – either we are tempted to under-spend, or to spend too much. Neither is good. Your company needs enough resources and capital to survive and thrive, so being too cautious can seriously impede your progress.

On the flip side, throwing money around is also bad. It’s easy to think, well, I should have that big car so people can see I’m doing well, or that top-of-the-line copier, or the uber-expensive smartphone. But if your business can’t bear the costs, that sort of thinking could tip you over the edge.

Try to find out how much it took for other similar businesses in your circumstances to start up. Sites like smallbusiness.co.uk are useful places to start looking. Figure out your average annual sales and expenditure. Don’t forget small items like stocks of headed paper, wrapping materials, postage etc.

6. Over-Solving Problems

You know how it is – something goes wrong, and you want to smash the problem into oblivion so it never, ever surfaces again.

For example: you hire someone and they turn out to be completely wrong for the company. As a result, you find yourself giving the third degree to anyone you interview as a replacement, treat them with suspicion, or over-manage them.

Resist the temptation to over-correct. By all means examine the process that led to your mistake to see if it can be improved, but don’t overdo it. You could well create another, entirely different problem.

7. Not Getting the Basics Right

In the beginning, small businesses are often carried forward by enthusiasm, but as time goes by you will find that there are processes – ordinary, boring but absolutely vital processes – that have to be mapped out for the business to run properly.

As your business grows, every employee has to understand exactly what they should be doing and how they should do it. If they don’t, your company can quickly go badly astray.

Every business needs sufficient detail for a framework that ensures all staff are able to produce what is expected of them, at the right quality and cost, and to deadline.

8. Losing Focus

As the old saying goes, ‘a bird in the hand is worth two in the bush’ – in other words, if you neglect your main business to go chasing possible opportunities, you could end up in deep trouble.

As your business grows, it’s really important that you stay focused. There may be all sorts of tempting opportunities offered to you if your business shows signs of success, but you will need to evaluate these with the same care that you did your original business proposition.


We all make mistakes – that’s the one thing everyone can be sure of. With a bit of forethought and planning you can avoid the obvious traps, and make sure your business is a huge success.

Let’s recap those traps to steer clear of one more time:

  1. Make a business plan.
  2. Delegate sensibly.
  3. Plan ahead.
  4. Don’t ignore small problems.
  5. Get your finances right.
  6. Don’t over-correct.
  7. Get the basics right.
  8. Maintain your focus.

We’d love to hear from you. Are there any other traps small businesses need to watch out for? Or issues you’re particularly struggling with right now? Get in touch and let us know!

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