Avoiding common small business pitfalls in 2012

As 2012 begins, a frequent resolution among entrepreneurs is to make smarter business decisions this year. Susan Wilson Solovic, co-founder of ItsYourBiz.com, recently listed several common business errors in an article for The Wall Street Journal's entrepreneurial advice column, Small Talk.

Failure to research the market is a frequent downfall for entrepreneurs looking to start or expand a business. Make sure there's an appetite for your products or services in the area where you're considering setting up shop.

Employees are a crucial part of your company - after all, those who work for you act as representatives for the business. Poor hiring decisions can have a negative effect on your customer base and revenue, so be sure to focus on securing workers with the necessary skills and the right attitude to help your business grow. Some entrepreneurs bring in friends or family, which, according to Wilson Solovic, could be a costly mistake.

"Always remember, business is business and friendship is friendship," she writes. Even the best boss can have difficulty separating personal and professional relationships, so bringing on those you have a history with outside of the company is probably not a good idea.

If you do decide to hire a friend or family member, it's important not to let your existing relationship with them overrule your good business sense. Wilson Solovic offers the example of Rob Lewis, founder of a Tampa, Florida-based equipment sales company who hired a friend without making him sign a noncompete agreement. The friend subsequently started a similar business and poached half of Lewis' customers, decimating his profits.

According to a recent study by global professional recruiting group Hays, less competitive salaries and benefits packages are reducing the success of small business' recruitment efforts. However, Business Insider notes that small enterprises have an advantage when it comes to tailoring offers based on the market or the needs of individual prospective workers, because they have less rigid policies than larger companies.