Fear of failure is one of the biggest reasons people put their dreams of starting a business on hold. That’s understandable. It is a big decision to leave full-time employment behind and invest your savings in a new venture. You need to have a lot of confidence that it will succeed if you’re going to take the plunge.

That said, you don’t want to talk yourself out of pursuing your great idea just because there’s a chance of failure. There are many ways to improve your odds of success. The first step is understanding the common reasons startups fail. Going into business with your eyes wide open can help you prevent common obstacles from derailing you.

No matter where in the world you are starting up, there are two main reasons entrepreneurs end up shutting their doors, according to the Global Entrepreneurship Monitor 2013 report, a study done by Babson College and several other universities. One is that the business is not profitable. The other is that it has problems getting financing.

So how do you avoid these hazards? There are plenty of ways to make sure a business will be profitable before you start it. The most tried-and-true is to run it on a limited basis, ideally while you are still employed. Suppose you want to run a restaurant. Before you buy or rent a space for it and hire a team of servers, make sure there’s a demand in your target market for the food you’re offering. Try selling your signature dishes through a catering service you run on weekends or at a local farmer’s market to see what the response is. That can give you a chance to fine-tune your offerings before you make costly mistakes. During your trial run, you may discover that some of your initial assumptions about your market were not correct and, for instance, you’d be better off setting up shop in a different community or opening a lunch restaurant instead of one that serves dinner. Finding this out early can help you adjust your business plan, so you don’t lose money.

You can prevent the other major hazard–financing shortages–by taking a couple of important steps. First, do your due diligence on what your startup costs will actually be.

Talk with the owners of businesses similar to your own to get a sense of what your outlays will be the first and second year. Ask how soon you can expect to bring in revenue, and how much you might realistically expect to earn. You will probably need to find a way to cover your business and personal overhead with cash from outside of the business. Also, ask established owners what might go wrong that might cost you money. Many new owners neglect to prepare for situations that can derail a business—like a major repair that lands a food truck in the shop for a week.

If you’re planning to buy an established business, the franchisor or owner will generally provide you with extensive financial information during the due diligence process. Have an experienced small-business attorney or accountant review it with you if you’re not clear on the fine points.

Once you know how much money you need to have on hand, you can come up with a plan to raise the money. For many startups these days, the majority of their initial financing comes from the owner’s personal savings. Owners sometimes tap other resources, too, such as the equity in their homes or their retirement accounts. Sometimes, business owners will arrange their lives so the family can live on a spouse’s income during the startup period.

Banks usually don’t like to loan money to startups, so if, after tapping your personal resources, you still need to borrow, you will probably need to try other avenues. At FinancingFactory.com, we specialize in matching small businesses with lenders who are comfortable working with both new and established businesses.

Starting out with adequate funding is essential to your success. You don’t want to have to pull the plug on a great business because you’ve run out of cash.