Every successful small business owner has a slew of war stories—decisions they wish they hadn’t made, hires they wish they could take back, and expenditures they’ve struggled to recover from.

What are some of the biggest (and most common) small business mistakes? I sat down with three thriving entrepreneurs to get the scoop.

Mistake 1: Hiring with heart, not research

Back in 2008, Jennifer Leake, CMC, was in the mood to start a new venture. A longtime consultant, she wanted to create an online platform to aid other consultants in lead generation. She’d recently moved to Roanoke, Virginia, was introduced to an Internet marketer, and the two struck up a fast friendship. “I didn’t know anything about Internet marketing and I trusted him, so I hired him to help me start my business,” she says.

Leake expected a quick product turnaround, and was surprised when her friend’s results came up short. “He told me it was a complex project and was going to take longer than expected; then his Web developer disappeared for months and I was left in limbo,” she says.

Desperate for help, Leake did some research and found another expert to lean on. Although it pained her to fire her friend (especially after paying him thousands), she cut the cord, found someone new and launched Consultants Gold. Today, her business is thriving.

How to avoid it:

“Instead of making a decision based on a relationships, I should have gone out and put the project up for bid,” Leake says, adding that it is important to research talent before signing on.

In addition to research, Leake wishes she had been bolder when things were falling apart. “Since I had already spent thousands, I was afraid to walk away and start all over again, but that would have been the right thing to do,” she says.

Mistake 2: Launching a product before determining an audience

Carol O’Brien was born to be an entrepreneur; and with 20 years of marketing experience and an MBA from Babson College, she was primed to succeed.

Or so she thought.

In late 2009, she found herself laid off and excited to launch the product she’d conceptualized for years—a sticky welcome mat to help capture dirt before entering a home. “I’d seen them in the medical and high tech environments where rooms had to be dust free and thought they would be perfect for the home, too,” she says.

She started manufacturing the product and built a website, but things just weren’t adding up. She couldn’t define her target audience, didn’t know how to explain her product concisely, and was running out of money. By March 2010, O’Brien was in over her head.

“I decided to bring family and friends together for a focus group on what I should do,” she says. During the group meeting, one participant yelled out the words ‘kitty litter,’ and a light bulb went off in O’Brien’s mind. Instead of making a welcome mat for humans, she would create one to sit outside of a kitty litter box, thereby capturing germs and debris on the mat—not around the house.

O’Brien dove into a heavy research campaign. She spoke with cat owners, analyzed competitor products, listened to criticism, and launched her product, Stikitty.

“We sold it on our site for about nine months and then started approaching the retail market; today we are in talks with a national pet product distributor—things are going really well,” she says.

How to avoid:

O’Brien’s main problem was that she hadn’t defined her target market for the sticky welcome mats prior to entering the market. “I was just so excited to be an entrepreneur that I thought everything would work out,” she says.

The warning signs where there, she just didn’t want to listen. “I put on blinders; I stopped listening to others’ criticisms and nagging thoughts in my own head,” she says.

How can small business owners decipher constructive criticism with unnecessary criticism?

“In the beginning, people would ask me why I was leaving a good career behind, telling me I should go back—those are the criticisms I pushed away; the ones I should have listened to were about the product—how will I define the target market, how will I distribute, etc.—those are questions I should have been able to answer comfortably and confidently,” she says.

Mistake 3: Lack of focus on bookkeeping

In late 2009, Los Angeles resident Cyndi Finkle was picking up her daughter from an extra-curricular art class when the owner of the studio mentioned that they planned to shutter the establishment and move to France. “I looked at the owner and said, ‘Wait, I’ll buy your business,’” remembers Finkle.

She did just that and a few months later, Finkle was the owner of Art Works Studio & Classroom in Culver City, California. While transitioning to ownership, she also opened a second location in Hollywood, California. Both studios were booming from day one, proving a hectic life for Finkle. Through it all, she let the bookkeeping go by the wayside.

“I had inherited their accounting systems, and even though I was paying bills, I didn’t have a system in place for recording anything properly,” she says.

In March 2011, Finkle knew she had money in the bank, but when her husband asked her about specific numbers, she answered with a blank stare. That’s when she knew something had to change. “I had to stop running my business and building my brand to play catch-up, get a bookkeeper on board, and get balance sheets in order,” she says, adding that today, things are running smoothly.

How to avoid it:

“Most of us are not business majors; I joke with my small business owner friends that someone should create a business for entrepreneurs to take care of the business side of a business,” she says.

She recommends having a process in place on day one. “You need to know where you are and where you want to go,” she says.