I'm starting a small business , What pitfalls should I avoid ?

As someone who works with many new companies to help them get set up and going I can tell you a few very important things to do. There are 2 people you absolutely must speak with (if you haven't already). An attorney and a CPA.

This was touched on by others, but to be very specific you should have a budget in place for your personal expenses (so as was mentioned above you know how much you need to make at a minimum to cover everything) and then a budget for the business. The one thing most people forget when laying out their budgets is to factor in your income taxes.

Also if you can afford it, set up a corporation (preferably an S-corp). LLC's are hit with gross receipts taxes and if you are the only member it becomes a disregarded entity for tax purposes. The S-corp is a "flow through" entity meaning that the income flows to you personally. This setup lends itself to some tax advantages your CPA can tell you more about.

Start tracking your bookkeeping right away, don't wait. All too often my clients become my clients because they waited to do this, didn't keep the right documentation around and it cost them a fortune to have me straighten it all out for them.

If you are in a service business make sure you have all of your clients sign an agreement (this goes back to the conversation you will have with your attorney). It is especially important to do this if you do business with your best friend(s) because all too often it is not about trust, but about a difference in "understanding" about what the arrangement was.

Shop your competition - see what they are doing and think in terms of how yo can improve upon it.

Be selective - be very selective about whom you work with both in terms of customers and in terms of employees / sub-contractors. One of the greatest gifts of having your own business is having the freedom to chose exactly whom you want around you. I refuse to work with negative people.

Whatever you are doing, make sure you absolutely love it and can't wait to get up and do it every single day!

Hope this helps!

PS you may enjoy this video I've put up on the web about starting a business: http://www.youtube.com/watch?v=uoMagHfajlc

Get the word out about your company to as many people as you can, including other small businesses, as if these small businesses grow larger, they may attempt to share their success with you by giving you tips related to marketing, etc. or may even advertise your company themselves. If you decide to spread the word, remember that word-of-mouth travels a long way, and a few good writeups about your company could boost your popularity immensely.

If you plan to produce goods that could be reviewed, you could offer review copies to well-known businesses that get a lot of attention, or maybe even to Chris, as I'm sure he'd love to review a product produced by a member of the community.

You will need solid input (such as your post here, good idea).

Don't trust advice from friends or family. They are likely to tell you what you want to hear in an offhand way to wish you well.

Listen to critics, listen to customers, listen to paid professionals.

Look in to government grants as well. I've started, ran and sold 3 successful businesses in the past that began with seed money from Uncle Sam which I had no obligation to pay back. The more useful the service you are providing based on the demand for your area of expertise, the better the chance of approval and the more money you'll receive.

I'll answer this question by pointing you to this LINK. Someone, (it may even be you) has posted a similar, (if not the same) question, and people have answered it (except they have answered it in comments instead of posting an actual answer) oh and some goofball has tried being witty by posting a link which links to itself just to confuse the poster (what a jerk) i hope this helps :-)

you should defenitley avoid lazy uninterested employees they slow you down.

not sure if you saw this but chris made a video response for you...

http://chris.pirillo.com/starting-a-small-business/

1. Know what you are doing. Don't be a baker if you know nothing about cake.
2. Capital. Cash. More is better than debt.
3. Trust yourself to make mistakes but don't trust others to make them for you. When you don't know what to do,don't do anything.
4. Never EVER hire kinfold, not even your brother's 1st cousins sister-in-law's exwife. NEVER!
5. Respect your limits, them push them.
6. Pay your bills at least 2 days before due date, but never before. Cash flow is the name of the game.
7. Hire the right people. Be slow to hire and slower to fire. Leave your ego at home.
8. I hate accountants. NEVER let one run your business. Never. It ain't all about numbers.
9. Find the best aggressive attorney but remember this: Lawyers only understand one thing: billable hours.
10. Always develop new business because you'll lose some customers/clients along the way. If you have a pain in the ass customer, at some time, after his account is current, let him know about your competetion.
11. Provide the very best product or service, never tolerate second best and feel no shame charging for it.Know what you're worth and be damn sure that's what you're charging.

Hell yes, I know what I'm talking about.