By Arash Asli, co-founder and CEO of

Business owners will continue to face challenges with each passing year, but if they can take a proactive approach to mitigate some of these potential pitfalls, they can safeguard themselves from the beginning and stand a higher probability of success over the long-term.

With all of this in mind, here are five pitfalls that every business owner must avoid when starting a new business.

1. Confusing a Product With a Business

From the get-go, many business owners confuse a product with a business. The risk of this type of thinking is that they don't consider all the components that need to work in harmony to create a business -- such as HR, culture, systems, legal, etc.

Incompetence -- specifically in the planning stage -- is one of the leading causes of business failure. This ineptitude isn't innate; it can easily be overcome with necessary due diligence. Related is the failure to consider the market. CB Insights found that over 40 percent of businesses fail due to a lack of a market need. Business owners need to determine whether or not there is a market demand for that product in the first place through the necessary market research and seeking out expert opinions.

2. Failing to Differentiate Your Business

Related to the topic of market research, and determining whether there is a demand for your product, is the concept of brand positioning -- that is, differentiating your business from the rest. 

Failing to think about how you can differentiate your business from competitors can threaten its long-term sustainability. Keeping an eye on your competition is crucial at every stage of your business, but that is especially true in the beginning. When it comes to competing, don't make the mistake of competing on prices.

3. Cost Cutting at the Expense of Bringing in New Business

A classic pitfall that many business owners fall into is trying to cut costs. What's on the line, however, is much more consequential: new business itself. Many business owners attempt to save money by taking tasks on themselves, but in doing so cannot achieve high-value wins like bringing in new customers while their time is spent elsewhere. They get worn out as they underestimate how much time is required for their end goals. The focus should always be on bringing in new business over saving inconsequential dollars.

4. Not Testing Anything

Businesses need to rigorously test and measure everything. Failing to keep tabs on your metrics and data is a mistake at any point in a business. The right decisions as to where your budget should be allocated, for example, can't be made if you don't know how many new potential leads you have or how many sales you've made.

In short, testing every aspect of your business especially from the very beginning, from your sales to your marketing and everything in-between, is essential. Experimenting and learning from those outcomes can help you know if you're on the right path and whether you should stay the course or try something new.

5. Scaling Too Quickly

From the outset, any business growth would seemingly only be a good thing -- and quick growth, all the better. Of course, growing too slowly is also a problem, but growing too quickly tends to get overlooked.

Instead, businesses should focus on strategies that support sustainable business growth. Knowing this, I wanted to ensure that we had all the right pieces in place when I began my business by ensuring that we had multiple revenue streams to keep us going, especially in our early years.

The Bottom Line

There are a lot of pitfalls that business owners have to manage closely when starting a business, from failing to consider the market, to cost-cutting at the expense of bringing in new business, to the risk of scaling too quickly. However, being aware of these pitfalls serves as a major safeguard against them, giving managers the advantage of knowing how to hedge their bets to yield higher chances of success.

Arash Asli is a co-founder and CEO of, an online scheduling and marketing platform for small businesses.