Focus

As a small-business owner, you know you are part of a unique breed—you have a strong sense of entrepreneurship, revel in competition and are willing to take risks. Maybe too willing?

The study

According to a study by the Small Business Administration (SBA), entrepreneurs are some of the biggest risk takers in business. The study asked 3,400 entrepreneurs whose companies had driven them to bankruptcy the following question: "In hindsight, would you have started your company?" A surprising 61.4 percent said they would.

Some psychologists say this response is to be expected from people who are drawn to owning a business. David Weiman, a management psychologist in Bala Cynwyd, Pa., told BusinessWeek magazine entrepreneurs share certain characteristics, such as being achievement-oriented, optimistic, creative and able to delay gratification.

The challenge

But despite these traits, many entrepreneurs lack basic financial habits necessary to keep a business afloat.

Consider what Gene Fairbrother, president of MBA Consulting, Coppell, Texas, told BusinessWeek: "If I ask 100 small-business owners how many of them do monthly financial statements, 90 of them will not raise their hands."

Fairbrother says entrepreneurs often obsess over sales rather than implementing efficient operating strategies and improving margins. As a result, many small businesses fail.

When they fail, the owners go looking for loans to start new ventures. Although many financial institutions have great faith in small-business owners and their abilities to pay back debt, some can be wary of owners of failed businesses.

SBA helps many small-business employers. The administration's Web site has a wealth of information with regard to reorganizing a business, ways to secure a loan and general business resources. For more information, log on to www.sba.gov.

Ambika Puniani Bailey is editor of Professional Roofing magazine and NRCA's director of communications.