The 3 Biggest Mistakes I've Made as a Small Business Owner

Avoid these mistakes that cost me millions of dollars.

Starting your own business can be exhilarating, but it's not without its challenges. As a small business owner, I've made my fair share of mistakes. By sharing three of the biggest ones that I have made, hopefully it will help you from making the same mistakes. Here's to your business success.

1. Not being focused

Starting a small business can be incredibly energizing, and that energy led me to try to do too much at once with my business. I wanted to do everything myself, thinking I'd save money, and I ended up spreading myself too thin. Between all the marketing, bookkeeping, customer service, product development tasks -- and more -- I was soon overwhelmed.

As the saying goes, "the person who chases two rabbits catches neither." I often felt like all my attention was divided across dozens of competing priorities. I was unable to give enough time to important tasks, which resulted in me making mistakes that could have been easily avoided. When you spread yourself too thin like this, things can easily slip through the cracks or suffer from lack of attention due to competing priorities.

Eventually, I realized that being unfocused took away from what I should have been most focused on -- my passion that started it all. This was developing an innovative service for my customers. After rearranging my priorities -- and actually paying for help in areas like marketing, accounting, and tech support -- my business quickly gained traction as well as financial stability.

2. Not hiring the right people

You can't build a great business without great people. One of the biggest mistakes I made was not hiring the right people. I lost valuable time, money, and labor due to poor management decisions that could have been avoided if only I had chosen the right employees. You want the right people on the bus, the wrong people off the bus, and then the right people in the right seat.

How do you know you have the right people on your team? Everyone accentuates each other's strengths, and helps overcome each other's weaknesses. The team is motivated to be working towards the same goals, everybody trusts each other, and they exhibit a selfless attitude. If you have to encourage a person to do their job, then they are most likely not the right person for the role.

I spent years building my small business and employing one bad worker for a few months set me back significantly. Hiring employees with the right qualities, skills, and experience helps foster a more productive workplace environment, while also avoiding costly mistakes. Making sure to do proper research prior to hiring is incredibly important in ensuring success for any small business. Here is one big tip I learned: If during the interview process they complain about their previous boss, then stay away. Because you will be next.

3. Not managing cash flow and inventory

Cash flow is the lifeblood of any small business. According to Score, the number one reason small businesses fail is due to cash flow problems. Without a careful and proactive approach to managing finances, businesses can quickly find themselves in a vulnerable position, unable to pay bills on time and inhibiting future growth opportunities. While I was able to keep my initial expenses low, I didn't properly manage my inventory and invested in certain areas of the business that directly impacted my cash flow.

I was concerned with growing as fast as I could. It would have been wiser for me to build a stronger financial foundation before moving on to the next business initiative. Every small business should prioritize cash flow management in order to stay on top of their bottom line. Just like your personal emergency fund, you should have cash reserves for your business. By having a clear view of available funds and tracking ongoing expenses, a small business will be able to use their financial resources most efficiently and increase potential for growth

Running a small business is a challenging endeavor, and I had to learn these lessons the hard way. Hopefully you can avoid making them yourself. Another key to business success is picking yourself up and continuing to persevere. Just because we fail doesn't make us a failure, but can help us become better entrepreneurs moving forward. While there's no one-size-fits-all solution for avoiding all potential pitfalls along the way, these three tips should help any small business owners steer clear of some of the most common missteps while getting their operations off the ground successfully. Best of luck!