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:

The Small Business Development Center has several webinars coming up : SPlog  Smile Politely - Champaign-Urbana's Online Magazine

Shortcuts Will Kill Your Business

Think of your business as a living, breathing, organism. It... Read More

Joint Venture Your Way to Extraordinary Sales!

You know what makes me really happy? Drinking a Starbucks... Read More

Small Business Success - It?s a Matter of Confidence

I was floored! I couldn't believe what they were saying!... Read More

SBAs 8(a) Program Can Help Some Companies Compete

Q: A friend told me that as a woman of... Read More

Hone Your Edge, Stay Focused

A common hazard faced by new entrepreneurs is a lack... Read More

Small Business And The Ability To Find Market Place Opportunities

Marketing is one of the four corner-posts of a solid... Read More

Become The Squeaky Wheel and Watch Your Business Skyrocket!

Providing high quality customer service is a must for any... Read More

Naming Your Business: 3 Tips To Ensure Success

If you are just starting your business, or if you... Read More

Deciding Which State To Incorporate Your Small Business In

Once you've decided to incorporate your small business the next... Read More

Women and Small Business

In the book Women and Small Business author gives all... Read More

Its Spring - Time For A Compensation Program Tune Up

Now that winter has passed, the annual ritual of spring... Read More

Accounting Methods ? Cash and Accrual

When starting a business, you have to determine the method... Read More

Franchising Industry Burdened in Over Regulation

There were only an estimated 1800 active franchisors in this... Read More

Small Business Newsletter Dilemma: Which Day Do I Send?

If you're just ramping up your small business email newsletter,... Read More

Entrepreneurs and Franchisors Watch Out

New Franchisors and Entrepreneurs need to watch out as they... Read More

11 Things Small Business Owners Can Learn From Tiger

1. There Are No "gimmes" ? They count two-foot putts... Read More

Pressure Washing Heavy Equipment

One of the best ways to make money in the... Read More

Knowledge is Power

Why does research and education play an important part of... Read More

Mobile Car Washes and Shoe Policies

Mobile carwashing is hard work, it is tough on the... Read More

Tips For Successful Home Show Businesses

Opportunities for home show businesses have never been more abundant.... Read More

Maintaining Your Carpet Extractor in Your Auto Detail Shop

Auto Detailing: Maintaining A Commercial Carpet ExtractorYou should drain your... Read More

Becoming Recession Proof

A lot of business owners I've spoken with lately have... Read More

Franchise Company Operations Manual Sample Outline

Many companies wish to expand and a few wish to... Read More

Get In Touch With Your Competition!

We all know that competition is an ugly word but... Read More

How Mastering 5 Essential Money Making Ideas Can Lead Your Business to Longterm Cashflow

Essentially there are 5 tremendously powerful methods to make money... Read More