Running your own business can be very rewarding, but success is not always guaranteed. Half of small businesses fail in the first couple of years, according to official reports, but there are certain steps you can take to give your business the best chance.

First, does your business have a clear mission, yearly goals and a long-term business plan? Ensure your goals are specific, measurable and achievable. Introduce regular reviews of these goals and set new ones when appropriate. Most importantly, communicate your mission and goals to your employees. Their livelihood is tied to the success of your business, so make sure they know what they need to do to keep your business healthy.

A shortage of cash is generally what sinks small businesses, so learning to monitor your cashflow is critical. Check the dates of major outgoings, such as tax and payments for rent and rates, to ensure that you have enough cash for when these need to be paid.

If you're setting up a partnership, choosing the right person is vital. Once you have made your choice, put in place an agreement which sets out the rights and responsibilities of each partner in the business. The agreement should also deal with what happens when difficulties arise; for example, does one partner have the ability to buy the other out? Or should the business simply be closed down – which could result in the end of a successful business?

Knowing your market and accurately assessing the potential demand for a product is the key to an idea succeeding or failing. If your product has a very limited market, you won't be able to sell enough to create a successful business. You should take time to understand who your competitors are and identify what distinguishes your business from theirs. Perhaps you can provide a better service or compete on price. It all boils down to understanding why customers would rather buy from you than other companies in the field.

There is a lot to think about when starting your own business, but avoiding these common pitfalls will give your business a good chance of success.