subject: 3 Reasons Small Businesses Fail And How To Avoid Them [print this page] Let's face it, most small businesses are doomed to failure. No matter what you do, there will always a threat of business failure or lower-than-anticipated financial return. Many entrepreneurs are so anxious to get started that they neglect business planning and bound in headfirst with little more than a dream and an idea. Business consultants declare that ninety% of startup businesses will fail. There are various totally different paths to business success but all business failures share common causes. Nobody starts out pondering that it will befall them, but inevitably, it does. There are some common pitfalls that may lead to business failure and we're going to discuss the principle three culprits. If you happen to handle the common reasons for failure in the beginning, you'll be much less likely to fall victim yourself. Let's discuss each of these in some specificity and supply some strong solutions.
Failure 1 - Lack of Knowledge and Planning (Experience) - It sounds simple, however the primary cause why businesses fail is because the business proprietor not take the time to learn his business. Some seventy one% of firms fail due to poor planning and a lack of specialized knowledge. Bear in mind that just because an entrepreneur does not have the information, it doesn't imply that the knowledge doesn't exist. It merely signifies that the entrepreneur failed to take the steps to search for it. The main key to survival is to be sure to know what you are doing in terms of the business you choose.
Solution 1 - Get the best training you can find and write a solid business plan. The upfront investment in training will definitely be well worth the cost.
Failure 2 - Poor Management (Management) - The second most reported reason small business fail is poor or inexperienced management. Management comes down to 2 things: competence and experience. New business owners often lack related business and administrative experience in areas corresponding to finance, purchasing, selling, production, and hiring and managing employees.
Solution 2 - First, work with a skilled mentor or coach to be taught specifically the way to handle the business you might be getting into. Second, don't open a business that instantly requires staff; try to manage your self first.
Failure 3 - Capital Deficiency (Money) - Everybody wants to be a fat cat when they first get started, but before you try swing multi-million dollar lines of credit, recognize the fact that your foremost purpose needs to be business survival. And business survival means enough startup money and ongoing cash flow. Many new businesses severely underestimate what it should take to start out and maintain their new business - very large mistake! When owners underestimate the amount of money is required they are compelled to shut down before they even have a good shot at success.
Solution 3 - Select a business that has very low startup expenses and minimal onging costs. That way, it isn't only easier to make the business profitable, but additionally, if it doesn't work out you have not harmed your self too badly and you can move on to the next venture with solid lessons learned.
by: Bill Charles
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