Why Small Businesses Fail: SBA
The U.S. Small Business Administration
The U.S. Small Business Administration has seen lots of small businesses come and, unfortunately, go. According
to the SBA, over 50% of small businesses fail in the first five years. Why? What goes wrong?
In his book Small Business Management, Michael Ames gives the following reasons for small business failure:
1. Lack of experience
2. Insufficient capital (money)
3. Poor location
4. Poor inventory management
5. Over-investment in fixed assets
6. Poor credit arrangements
7. Personal use of business funds
8. Unexpected growth
Gustav Berle adds two more reasons in The Do It Yourself Business Book:
10. Low sales
These figures aren't meant to scare you, but to prepare you for the rocky path ahead. Underestimating the
difficulty of starting a business is one of the biggest obstacles entrepreneurs face. However, success can be yours
if you are patient, willing to work hard, and take all the necessary steps.
On the Upside
It's true that there are many reasons not to start your own business. But for the right person, the advantages
of business ownership far outweigh the risks.
You will be your own boss. Hard work and long hours directly benefit you, rather than increasing profits for
someone else. Earning and growth potential are far greater. A new venture is as exciting as it is risky. Running a
business provides endless challenge and opportunities for learning.
For more information on assessing your readiness, see: Are You Ready for a Small Business? Source: U.S. Small