Eric 1 year, 1 month ago
From your findings what are the top 3 causes of small business failure?
There are countless reasons why a small business fails, but many of them can be tacked back to just a few root causes. Have you studied out what some of the root causes are, that on the surface may look varied, but at further study comes back to just a few core issues?
It seems as though the statistics are changing and small businesses are failing less than previously recorded. What do you think are the greatest contributions to reversing the long time trend of small business failure?1 Reply
Laura HandrickMember1 year ago
I’m going to chime in here based on my own observations. I think there are three things that cause businesses to fail, and I believe there are good reasons that many don’t.
1) Failure to properly fund your business.
Business owners by nature are an optimistic group and often undercapitalize. They think, “hey, I can make this work on a shoestring”, and then they run out of money. Not being able to make payroll, purchase inventory or pay the rent is a business killer. I’ve also seen many small biz expand too quickly, renting out extra space (they don’t yet need) and get themselves in over their head with too many fixed costs.
2) Bad customer service.
I’ve seen this so often! Small business start with a dream of what THEY want to do but fail to think about what their customers want, or they treat their customers badly. Business is ultimately about people. If a business owner doesn’t put the customer’s needs ahead of their own, they’ll find they have no customers. All the marketing in the world can’t fix a bad reputation in the long run. And with so many online review sites, others find out quickly which businesses to avoid. We’ve had so many small businesses come and go in our town, — most because they miss the most basic of principles! Greet people as they arrive, make them feel welcome, listen to their needs and do what you promise.
3) Failure to get support.
Businesses fail because they make avoidable mistakes. For instance, an IT programmer tries to launch a business, with little sales or accounting skills, or a Chef tries to launch a business with no idea of how to recruit and retain staff. Small business owners should not go into it alone — no one person knows everything. Therefore, they need to be realistic about what they love to do and what they’re good at, and get help (payroll software? a sales manager? legal council?) to avoid common mistakes.
One need only search our http://www.fitsmallbusiness.com website for the word “mistakes” to see what to avoid. Personally, I recommend any new business owner hire a business coach — for the money they invest in themselves and their business idea, they’ll more than make up for by avoiding common start-up mistakes.
The good news is that start-up companies like ours are helping small businesses avoid these mistakes and provide cost-effective tools, like free CRMs and low-cost payroll software that both save a new business money, but also provide advice and insights to prevent mistakes.
Being able to find information online ‘just-in-time’, from start-up funding to how to guides, may be one factor in helping more small businesses succeed from the get-go.
Laura, Staff Writer, MAEd