In our years of working with small businesses, we have seen companies survive recessions, pandemics, and industry upheavals. We have also seen companies fail during boom times with plenty of demand. The difference usually comes down to avoiding a handful of critical mistakes.

1. Growing Without Margins

This is the number one killer. A business starts growing fast. Revenue is up. The owner is excited. They hire more people, sign a bigger lease, buy new equipment. Then they look at the bank account and realize they have been growing at a loss.

Revenue growth without margin growth is a countdown to failure. Every new dollar of unprofitable revenue just gets you to insolvency faster.

Before you chase growth, prove that your business model is profitable at its current size. Then grow.

2. Single Customer Dependency

If any one customer represents more than 25% of your revenue, your business is dangerously fragile. We had a client who lost their largest customer, which was 40% of revenue, with 30 days notice. It nearly ended a 15-year-old business.

Diversify your customer base deliberately. It feels safer to lean into one big relationship, but it is the opposite of safe.

3. Ignoring Tax Obligations

The IRS is the one creditor that will end your business without hesitation. We have seen owners skip quarterly estimated payments to cover other expenses, promising themselves they will catch up later. They rarely do.

Payroll taxes are even more dangerous. Failing to remit payroll withholdings is a federal offense that carries personal liability. That means the IRS can come after your personal assets, not just the business.

Pay your taxes first. Everything else can be negotiated.

4. No Financial Visibility

You cannot manage what you cannot see. Business owners who do not know their current cash position, their profit margins, their burn rate, or their accounts receivable aging are making every decision blind.

We have seen owners who were shocked to discover they were insolvent. Not because the information was unavailable, but because nobody was looking at it.

Monthly financial reviews are not optional. They are the minimum standard for responsible business ownership.

5. Mixing Personal and Business Finances

It seems harmless. Using the business card for personal expenses. Depositing a business check into your personal account. Lending money between personal and business accounts without documentation.

But this habit has consequences. It makes accurate bookkeeping nearly impossible. It complicates tax filing. It jeopardizes your liability protection. And if you are ever audited, it is the first thing the IRS looks at.

The Common Thread

Notice what all five mistakes have in common. None of them are caused by external forces. They are all internal decisions. Which means they are all preventable. The businesses that survive long-term are not the ones that avoid bad luck. They are the ones that avoid bad habits.