(1) Choosing a business that's not profitable : Just because you think you have a great idea for a business, does not mean your venture will thrive. Before you invest your 401k or you kids' college savings — research, research, research. If you have a product-based business, make sure the market is not already overly saturated. If you have an idea for a new service you want to offer, make sure it's viable.
(2) Having inadequate cash reserves/cash flow: Many business owners -- especially sole proprietors — may find it difficult to save money. As soon as they receive a payment, they usually have to reinvest it into the business, or take a salary. But, business owners of all sizes should have a cushion socked away for a rainy day. As a freelance writer, one of my biggest challenges I have faced over the years, is getting paid in a timely manner, for projects I have completed. Thankfully, this is not an issue presently, but there have been times when I have to wait 90 days or more for an invoice to be paid. I have also not gotten paid for work I completed. What hurts me the most is when another small business owner (and yes, writing is a business) stiffs me.
If you want to remain in business, put away several months of operating expenses to tide you over while you wait to get paid, or during the times when you don't have customers or clients.
(3) Failure to clearly define or understand your market, your customers, and their buying habits: Again, just because you believe you have a perfect business idea does not mean everyone else will. If you've ever watched Shark Tank , you know what I mean. There are some people that waltz into the tank with the craziest ideas, without conducting any type of market research. "If you build it they will come" , only works in the movies. Do your research!
(4) Depending too much on one single customer: The old adage about not putting all of your eggs in one basket is so true when it comes to running a business. I admit, I have been guilty of this infraction and have paid the price. As a writer, I know all too well the dangers of relying on one single customer. Publications fold or get eaten up by larger conglomerates. Editors move on to different publication and sometimes assume different roles. If you supply widgets to a major company and you've placed all of your eggs in that one basket and the company goes under, then what do you have? A basket full of scrambled eggs and a low balance in your bank account.