Five pitfalls that could result in small business failure

Research sponsored by business advisory company AdviCoach recently revealed five factors that often result in failure for small enterprises across industries and sectors.

Financial management snafus and cash flow restrictions are a common problem, and are responsible for more than two-thirds (70 percent) of business failures within their first year, according to the company.

Companies that don't have defined sales processes in place may fall victim to underachievement and low revenues that could spell disaster from a business perspective. According to AdviCoach, underperforming salespeople often bring in at least 50 percent less revenue than top members of a sales management team, which translates to a great deal of lost sales.

Similarly, the selection, retention and training of salespeople and other employees could make or break a company and should not be taken lightly. Mismanaging human capital can hold companies back - especially during unfavorable circumstances such as the current economic climate, when unemployment rates are high.

Failure to put together a comprehensive business marketing plan can be another stumbling block for new entrepreneurs, as it can lead to advertising capital being wasted on soliciting an inappropriate demographic, draining the company's budget without achieving significant positive results.

Lastly, communication should be the name of the game for small businesses just starting out. Owners should communicate with investors, employees and each other, and the company should also ensure that its offerings are accurately and adequately expressed to its customer base.

As Keith Camhi, co-owner of Great Play - a Stamford, Connecticut-based fitness gym for kids - told Fox Business, "It is not sufficient to have a great offering. You have to go out and get people to come through the doors and experience it."