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Sure path to business failure
It's hard to start a business, but yours can crumble quickly without enough cash and market sense.
Focus on careers

5 ways to crash your small business

Millions of workers dream of starting their own business, but the odds of being successful are daunting enough to keep most hopefuls on the sidelines.

For those who do go into business for themselves, without a background in business, it can be a steep learning curve.

But hope springs eternal. According to the Small Business Administration, or SBA, 637,100 small businesses with employees were opened in 2007. Based on its research, the SBA estimates that two-thirds of new establishments will survive two years; only 44 percent will survive four years. The survival rate plummets to 31 percent when the life of the business reaches seven years.

Although small businesses can crash and burn for many reasons, avoiding some of these common mistakes can help your small business beat the odds.

How to run your business into the ground
Treat the business like any other job
Employees who make the leap to entrepreneur can fall into the trap of treating their business as a job they've created for themselves.

Treating your business as any other job -- except you get to be the boss -- undermines the enterprise.

"Rather than seeing the business as a separate entity from themselves that has revenue and expenses that include their salary, profit margins and income, they really see it as a situation where, 'If I'm charging $1,000 then I get to keep $1,000 minus a few things,' " says Wendy Vinson, president of E-Myth Worldwide.

"And that really is very much a technician or employee point of view, but they're trying to run a business that really has a whole other set of principles," she says.

Being inspired by the work they love can push people to take the leap into their own business. But running that business requires a different set of skills from the work they began. Sticking to the same mindset that makes a successful employee will not make a successful business owner.

Luckily, the set of skills it takes to run a successful business can be learned in classes, from books and from counselors at small-business resources such as SCORE, a Washington, D.C.-based consulting service to small-business owners and entrepreneurs.

Dreaming big comes naturally to most entrepreneurs, but business acumen is something that has to be honed and practiced.

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-- Posted: March 30, 2008
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