Starting a new business from the ground level is potentially the most challenging career move a person can make. Keeping that business going strong and helping it grow require dedication, a lot of time and the implementation of sound financial strategies. Too often, small business owners get so caught up in the venture itself, they overlook the finance and management issues that could fatally affect their business.

Here are the five major pitfalls a small business owner should avoid for a profitable year:

Pitfall #1- Failure to develop a business plan and budget
Your business plan lays the groundwork for your company. Without it, your business may face financial struggles, which are otherwise easily avoidable.

The Solution: A business plan includes your policies and procedures, specific plans for the near future, general plans for the distant future and a budget based on the plans you laid out.

Developing and using a budget helps you manage cash flow accurately and prepare for business growth. A budget will also help you deal with employee bonuses, profit-sharing expenses, paying tax bills, purchase of raw materials and establishing a line of credit with your bank.

Your business plan and budget should be based on a 12- month period and updated annually. Planning also offers other advantages such as increased deferment of taxes and the opportunity to funnel more money to shareholders and employees.

Pitfall #2- Inadequate accounting
Many business owners put off bookkeeping in favor of more pressing matters, e.g. marketing, serving customers and product development. Then they learn making wise financial decisions can be a difficult if not impossible responsibility.

Finding the time to study financial statements to evaluate financial information effectively and spot opportunities doesn’t come easily for a small business owner.

The Solution: Find a professionals you’re comfortable with and use their knowledge to make your business run smoothly. Involving your CPA as a “partner” in your business allows him or her to analyze your situation and establish an accounting system that works for your business. Hiring a professional to handle these aspects of your business saves you money in the long run and ensures financial security.

Pitfall #3- Lack of internal controls
Many small business owners entrust their entire bookkeeping operation to one employee. While it’s important to have a bookkeeper, making that person solely responsible for all your financial transactions makes it less likely you will catch mistakes in financial statements or possibly a record of embezzlement.

The Solution: Protect your interests by staying involved. Thumb through checks as they come in, sign all checks, review monthly bank statements and occasionally fill in for your bookkeeper. The segregation of duties seems nearly impossible in a small business, but it’s necessary for you to find a balance to keep things in check.

This effort can be as simple as having your bank statements sent directly to your CPA before passing them along to your bookkeeper. If your CPA doesn’t scrutinize the statements, a quick review can sometimes uncover unusual entries or trends. You should also obtain the necessary reports at month’s end that tie all financial activity together for that time period. These reports let you see where you stand month to month and reveal any mistakes or financial misconduct.

Pitfall #4- Failure to delegate
Doing everything yourself can be a fatal error for any business. The timeliness and quality of your product suffers, and it becomes harder and harder to maintain a competitive edge in your market (not to mention creating extra stress and anxiety).

The Solution: Consider delegating aspects of the business such as scheduling, production or daily bookkeeping to staffers and outside vendors. This step frees you to concentrate on the big picture and gives you time to grow your business.

Pitfall #5- Failure to actively manage the business
Delegating is one thing, but giving away the house is another. Allowing subordinates who don’t have a real economic interest in the company to take charge may put your business at serious risk.

The Solution: Find a good balance between delegating duties and staying involved, to some degree, in all major areas of your business. Communicate with your staff and ask for regular updates. Establish methods to assess the quality of work that’s being done for you. It’s your job to provide vision for your company’s future, but you don’t have to know all the answers. Smart business owners rely on outside professionals, such as attorneys and accountants, to help make their businesses profitable and successful.

Eve E. Brown is a partner of Presser, Lahnen & Edelman, CPAs and has worked with the firm for more than 10 years. She specializes in statement preparation, retirement plan administration, and tax and financial planning. Her client base is largely comprised of small businesses based in the Jacksonville area. She can be reached at 296-9333 or ebrown@plecpa.com