Reasons Small Businesses Fail & How You Can Avoid Them

Why do small businesses fail? It’s a question many entrepreneurs ask themselves when they see their own ventures spiraling out of control. Many of the issues can be addressed by simply understanding the reasons for small business failure. We share the reasons we’ve found here, so you can avoid them in your own business venture:
Why do small businesses fail? It’s a question many entrepreneurs ask themselves when they see their own ventures spiraling out of control. Many of the issues can be addressed by simply understanding the reasons for small business failure. We share the reasons we’ve found here, so you can avoid them in your own business venture:

1. There’s not enough demand for your product or service at the price you’ve set. Test what the market will bear before you jump into your business venture. If your competition is selling widgets for $1.00 you can’t expect to remain viable if you’re selling yours for $2.00.
2. Business is successful beyond your wildest imagination. Great, right? Yes, if you manage it correctly. If you get too excited and decide to expand or grow your staff too quickly you could easily eat into profits by trying to expand into a new and different market that may just not be as profitable. Slow steady growth wins the race.
3. No savings plan in place. As with your personal finances, you should have a cushion for savings and it’s just as crucial to have a savings cushion for your business. If you’re starting your business by borrowing money or being in the red, you may not be able to keep afloat.
4. Not planning to succeed. If you’re paying too much for labor, advertising, rent and other materials, you’re at a disadvantage. You need to have the tenacity to negotiate for rent and other items.