There are at least a couple of hundred individual steps in starting up the most basic business the right way. Though none are particularly difficult individually, very few first-time entrepreneurs are knowledgeable about every aspect of a startup. Often, the knee-jerk response is to "hire out" those weaker areas, or just overlook them altogether. Neither of these options is ideal. As a business owner with plans to build a thriving company, it is important that you know and understand the details of each aspect, even if you elect to hire outside or in-house professionals to handle some of the workload.



Often, entrepreneurs have a great idea for a business and know the operations side -- what the business does -- inside and out, but are less sure about the business side (accounting, marketing, business planning). So, they hire an accountant to set up the books, hire a marketing consultant or ad agency to develop some advertising, and forgo business planning altogether. While "leaving it to the professionals" seems logical, not knowing the details from the beginning will lead to big problems down the road. What happens when that professional is no longer available, or worse, if they didn't do the job right? How will you know? In most cases, the owners are forced to learn the ropes anyway when something devastating happens.

One entrepreneur definitely learned his lesson the hard way. When he launched his hi-tech installation company, he already had an excellent reputation regarding his skills in designing and setting up intricate home-theater systems. He decided to hire a large, reputable accounting firm to handle the books and trusted that they knew best. After several years of extraordinary success, the current recession hit his business hard. Unfortunately, the way the accounting system was set up did not accurately reflect the financial health of the company. Future contracts were going on the books, incorrectly, as current assets, so the financial statements the owner reviewed showed plenty of cash available. The recession hit, contracts were cancelled, and suddenly the bank account was empty, even though the financials provided by the professional accounting firm showed that the company was in good shape.

Ultimately, the owner was forced into bankruptcy, both professionally and personally. Had he understood how the future contracts were being booked, he would have been able to cut expenses and manage the finances in time to prepare for weaker sales, and would, by his own estimation, survived the downturn, ready to grow again when the economy improved.

Understanding your business's marketing efforts is also critical. You should know exactly who you expect to buy your product and the best way to reach them. You should be able to analyze the outcomes of each marketing effort and make sound decisions about what works and what doesn't. One small business relied on an e-mail marketing professional to get the word out about their new product. After dropping nearly ten grand on this firm, a networking contact showed her how to evaluate the cost-per-customer outcome of the effort. Turns out she was paying nearly $100 for each customer gained through this method, and her average sales was around $75. Of course, she was stunned to learn that the business was losing money with each email blast, especially because the professional had been providing statistics that indicated a far more successful outcome. Now, this entrepreneur schedules time each month to evaluate each marketing campaign by the numbers, making changes as needed. She has cut her marketing budget in half while cutting the cost-per-customer to under $5 each!

These are just two painful examples of the downside of relinquishing responsibility of your business to someone else. Successful entrepreneurship does take a lot of time and requires a willingness to become comfortable with all aspects of business ownership. By understanding the details from the beginning, you give your venture the best chance for success and avoid many of the most common pitfalls small business owners face.