How to Avoid the Most Common Reasons for Small Business Failure

The life cycle of the typical small business is short and painful. It starts out with a dream and ends with a whimper. And in between, a struggle of Herculean proportions is played out as the owner tries to figure out why the business isn't succeeding.

Depending on which survey you read, up to 80% of small businesses fail. Most fail within the first five years and those who survive the first five are often losing money. Pursuing a career in small business ownership seems like a fool's footpath straight to failure and poverty.

So, what is the difference between the 80% that fail and the 20% that succeed? When you examine the reasons that cause business failures, you begin to understand that most business failures are preventable. The major missing ingredient is knowledge. Business owners who get expert help before they open a business have a much greater chance of succeeding. Business owners who get expert help as their businesses grow and change succeed more quickly with fewer speed bumps along the way.

Why do businesses fail? A study published by Jessie Hagen of U.S. Bank gives the details of the top reasons for failure:

General Business Factors

? 78% - Lack of a well-developed business plan, including insufficient research on the business before starting it.

? 73% Being overly optimistic about achievable sales, money required and about what needs to be done to be successful.

? 70% Not recognizing, or ignoring, what they don't do well and not seeking help from those who do.

? 63% Insufficient relevant and applicable business experience.

Financial Factors

? 82% Poor cash flow management skills/poor understanding of cash flow

? 79% Starting out with too little money.

? 77% Not pricing properly - failure to include all necessary items when setting prices

Marketing Factors

? 64% Minimizing the importance of promoting the business properly.

? 55% Not understanding who your competition is or ignoring competition.

? 47% Too much focus and reliance on one customer/client.

Human Resource Factors

? 58% Inability to delegate properly - micro-managing work given to others or over delegating and abdicating important management responsibilities.

? 56% Hiring the wrong people - clones of themselves and not people with complimentary skills, or hiring friends and relatives.

To get your own business on the right side of the 80/20 split, assess your business to see if any of these Failure Flags exist. Then, systematically eliminate them. And if you don't have all the skills you need, hire an expert to help you. The cost of having a professional on your team is far less than watching your business join the 80% club.

Caroline Jordan is a small business coach and mentor working with small business owners to conquer the skill gaps that prevent success. For a free special report called Seven Secrets for Small Business Success visit http://www.TheJordanResult.com. Get Knowledge. Get Focus. Get Results.

In The News:

Back door rules 'stifle' small business loans  The Australian Financial Review

Starting Your Small Business

Where do you find more customers?How do you compete with... Read More

Looking for a Business to Run in the New Revitalized Downtown Area?

Looking for a place to add a Quick Lube away... Read More

Entrepreneur to Employer

You make the decision to go into business and for... Read More

Who Makes the BEST Alliance

What types of companies do you want to align yourself... Read More

Franchising 101- What You Absolutely Need to Know

Franchising has made the world look really small. The well... Read More

Small Businesses You Can Start in Automotive

There are many choices when thinking about a small business... Read More

Small Business Success Secret: Focus on Your Genius Work?

Do you know what your genius work is? It's the... Read More

Computer Related Habits From Small Business Owner - Be Prepared, Avoid Despair

Aside from the fear of losing a spreadsheet or research... Read More

How to Raise Your Fees and Thrill Your Customers

Think the best way to get more customers is to... Read More

Effective Customer Interviews Make Life Much Easier!

One of the critical success factors for service-related businesses is... Read More

Reduce Stress, Increase Profits By Incorporating Strategic Systems In Your Small Business Success

Whether you are an Entrepreneur or Business Professional there are... Read More

Small Business Strategies - Four Critical Success Factors

Scenario OneDuring a recent presentation, a business owner was given... Read More

How to Write a Credit Policy for Your Business

The book, "Become the Squeaky Wheel," by New Hampshire author... Read More

Six Sigma for Small Business

It is not surprising that some people may perceive Six... Read More

Is Your Business Profitable?

What's your job profitability? Do you know?Many business owners are... Read More

Accepting Checks in Your Business Virtually Risk Free

Most businesses accept checks as form of payment for goods... Read More

Sex Up Your Business Growth

A top executive called up me late in the night.... Read More

Using Holidays to Put Some Extra Cheer in Your Cash Box

No matter your age or station in life, we all... Read More

Marketing Your Small Business with Success Stories

-- The One Pager Shortcut Series --An effective and compelling... Read More

What is your Motto?

Company mottos can easily be printed on a business card.Sometimes... Read More

Why Small Business Must Turn to PR

If small business had no important outside audiences, it wouldn't... Read More

Pressure Washing at Golf Courses

There are many potential niches for pressure washing companies that... Read More

Small Business Grants - Tips from the Pros

Every business starts with an idea or a dream. To... Read More

Pet Grooming Business

Do you like animals? Would you like to work for... Read More

How to Profit from Business Consulting Opportunities

Business consulting opportunities might be just what your are looking... Read More