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:

Small Business Hiring Slows  The Wall Street Journal

Routine Maintenance of High Pressure Hot Water Motors

If you run a pressure washer business you need complete... 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

Home Based Franchise; What About Future Expansion?

As a franchisor I am always asked by new and... Read More

Image of Your Franchise Automotive Outlet is So Important

Image of your franchise automotive outlet is so important. Some... Read More

Small Does Not Mean Invisible!

Running a business on the net these days can be... Read More

Competition in the Mobile Car Wash Industry

We have all seen the mobile washing units cruising our... Read More

11 Benefits of Starting a House Cleaning Business

One of the biggest fears people have about starting a... Read More

Pressure Washing at Golf Courses

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

How to Manage Your Pipeline

How is your pipeline structured?I assume most of you have... Read More

Starting is the Hardest Part

You can't imagine how many people ask me how I... Read More

10 Cardinal Rules for Business Growth

After over 30 years of participating in hundreds of businesses,... Read More

Essex Accountant: Accountancy Firm MVP for Your UK Business?

Most business owners know when they need an accountant, but... Read More

Motorcycle Detailing Procedures Manual Sample Outline

If you are a motorcycle detailer and need to expand... Read More

Six Sigma for Small Business

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

7 Card Tricks That Improve Your Personal Networking Power

CARD SHARK7 Card Tricks That Improve Your Personal Networking PowerThe... Read More

Franchise Company Operations Manual Sample Outline

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

FFP vs. CPFF Contracts

SBIR Corner: FFP vs. CPFF contracts:In the SBIR/STTR world, the... Read More

Designing a Franchise Training Program

If you intend to franchise your company you will need... Read More

How to Give Informative Talks

Why should you do informative talks to smaller groups?Informative talks... Read More

Technology Community Helps SMBs Focus on Their Core Business

If you're starting your own business or currently work for... Read More

Marketing a New or Small Business on a Budget

There are almost as many opinions and views on marketing... Read More

11 MONSTROUS Small Business Marketing Mistakes and How To Avoid Them

Increase your profit potential by identifying ? and avoiding ?... Read More

Business Owner--Educate Thyself!

Remember the training programs, seminars, and workshops you had to... Read More

Franchises: How to Find the Best Franchise Opportunity for You

If you are looking for a franchise opportunity, the choice... Read More

FTC Franchise Rule if Enacted will Trigger Hardship for Private Sector

The FTC Franchise Rule maybe changed, as the Federal trade... Read More