Eighty percent of all small businesses fail in their first five years. Here are 13 of the most common reasons why…
2. Insufficient capital for startup and backup.
3. Inexperienced management. Insufficient experience in the management and the day-to-day operations of the business or of any business.
4. The wrong location, location, location. Low traffic, no expansion area, changing characteristics of the neighborhood. Is the infrastructure in place for cabling, telephones, networking and hi-speed data? Your customers are out there, but your business is not convenient because of driving and parking distance, or transportation costs.
5. Too much capital in fixed assets. The failure to properly anticipate the cost of equipment and real estate needed to start and expand.
6. Customer credit practices. Failure to properly extend and control credit extended to customers.
7. Unplanned expansion. If one location is doing well, a second doesn’t mean the business will do twice as well unless management is available.
8. Having the wrong attitude. Before undertaking any entrepreneurial endeavor self-assessment is essential.
9. Inadequate records and financial knowledge.
10. Unwillingness to employ and work with a banker, accountant, insurance agent and a lawyer. These are four essential partners to have and use.
11. Lack of managerial foresight. Failing to build staff and to delegate responsibilities in order to compensate for the owners limitations and/or the growth requirements of the business. You are now a leader not just a manager.
12. Poor market segmentation or strategy. Many entrepreneurs don’t know who their customers are. Factors such as, geographic location, consumer demographics, business size as well as changes in your market can have an impact on what and how customers buy.
13. Competition, or lack of market knowledge. The self-employed are often so engrossed in the daily task of running a business that the last thing they think about is what their competition is doing and how they can do it better