Why do small businesses fail?
Starting a business of your own and making a success out of it has a lot of benefits, such as being your own boss, facing new challenges, a high growth potential and small business can never be taken for granted. The following are the primary reasons for small business failure:- Lack of planning
Not having a proper business plan is a major pitfall that can lead to failure of a small business A SWOT analysis is necessary to be able to overcome difficulties during its growth. A business plan gives proper direction to the business.
Inexperience in managing a small business
To run a small business successfully it is necessary to be familiar with several aspects of the industry, its trends and possess the skills necessary to market one’s products and services. Inexperience in these aspects can result in failure of the business.
Poor marketing
The success or failure of a product can depend on good marketing. Therefore it is important to research every marketing method used and stick to those that are yielding results.
Poor selling techniques
Business will fail if owners are not able to get potential customers to buy their products.
Postponing tasks and improper time management
Deferring important tasks can be lethal to a business. Staff can be hired if necessary for doing tasks that a business owner doesn’t like to do.
Inferior quality customer service
A bad quality customer service such as not replying quickly to emails, phone calls, etc, can lead to customer dissatisfaction. Also, not giving the customer what he wants may weaken the bond with the small business owner.
Competition
Competition is a major factor influencing the success or failure of small businesses. Therefore it is necessary to identify the exact nature of competition, their services and how our products/services are superior.
Too much dependence on a single element
Small business owners must be careful against offering just a single major product service, or having just one big client. Though this might be the major source of profits, they must think of what may happen when they no longer have the source and try to broaden their horizons.
Entrepreneurial enthusiasm
Entrepreneurs must learn to differentiate between “true opportunities” and just new ideas that are not practical. It is necessary to compare the idea with the business plan objective and see if the skill time is really available to put the idea into practice.
Poor record keeping and financial controls
Not maintaining good accounts of profits and expenses, taxes etc is also a cause for small business failing.
Trying to make a hobby a business
Not every hobby can be transformed into a business. Before planning to start a small business, the idea must be thoroughly researched for its feasibility.
Entrepreneurial exhaustion
Having a small business requires patience, capital, time and energy. Not every individual is cut out for it. Log work hours can cause exhaustion and lead to a lack of interest in the business, which can stunt its growth.
Faulty location
Visibility is very important for the small business. If the store is not easily found by clients and suppliers, profits could suffer.
Inefficient money management
It takes about a year, or two, for small businesses to make profits, so not having proper resources can hamper the growth of the business. Also, personal use of business funds must be prevented.
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