Top Reasons Why Businesses Fail
Recent research has cast light on really why small businesses fail. And it's not just insufficient capital or bad management. Those two reasons don't cover much. There are many reasons and there are almost always more than one. A recent survey by Murphy Associates, Your Marketing Department, sheds light on the incidence of various issues that contribute to small business failures. Here are the percentages of the time various factors were in evidence in small business failures.
- Poor cash flow management skills/poor understanding of cash flow: 82%
- Starting out with too little money: 79%
- Lack of a well-developed business plan, including insufficient research on the business before starting it (on the market's willingness to buy, costs, etc.): 78%
- Not pricing properly - failure to include all necessary items when setting prices: 77%
- Being overly optimistic - about achievable sales, money required, etc. to do the things that need to be done to be successful, etc.: 73%
- Ineffective prioritization for the use of both time and money: 64%
- Not recognizing, or ignoring, what they don't do well and not seeking help from those who do: 70%
- Denying problems in the business until it's too late: 66%
- Minimizing the importance of promoting the business properly (marketing): 65%
- Insufficient relevant and applicable business experience: 63%
- Insufficient entrepreneurial instinct about how to run a business: 63%
- Not paying attention to the plan after it's developed: 60%
- Inability to delegate properly - micro-managing work given to others or over-delegating and abdicating important management responsibilities: 58%
- Hiring the wrong people - clones of themselves and not people with complimentary skills, or hiring friends and relatives: 56%
- Falling in love with their idea and losing objectivity and customer focus: 55%
- Poor people management skills: 54%
- Not understanding or recognizing, or ignoring competition: 53%
- Not knowing when to hire or fire employees: 48%
- Too much focus and reliance on one customer/client: 47%
- Business Start-up Quiz
- Take this quiz to see if you are up to starting and running your own business. These questions will start you thinking about what is involved to owning a business.
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- Can you handle not knowing where your next paycheck will come from or when?
- Do you have the cash reserves or source to pay your personal bills for the next 2 years without taking any salary from your business?
- How much are you willing to risk?
- Click here to take the full quiz.
- Fatal Pitfalls Of Running Your Own Business
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- Choosing an incompatible business
- Unrealistic expectations
- Using a Business Plan not tailored to you
- Click here to read the full list and to learn more.