Why Do Small Businesses Fail?

Most American small businesses end in failure, despite the fact that many people dream of one day running a successful small business of their own. In fact, if you look ten years down the road from the start date of most small businesses, less than 5% of them are still around. If you own or plan to own a small business of your own someday, you can avoid failure yourself by becoming aware of the major mistakes so many small businesses make.

Poor location: Most small businesses exist with a physical location, which makes their location an important element of survival. Lots of people jump the gun on starting their small business because they are so excited and filled with anticipation. While they should be waiting for the "right location," they instead going with whatever becomes available, neglecting the fact that they will likely remain in that location for as long as their business remains alive. Another motivation for people to take a lesser location is because of a lower price; but the extra money for a good location will pay dividends in the long run!

Saving money: Trying to save money on a location is not the only place where small businesses fail because they try to save money. Lots of small businesses hurt themselves in the long run by saving money in the present on presentation or creation. But if you want people to support you by spending money on the product you make or service you provide, you first have to spend money making and presenting the product or service!

Name recognition: Consumers already know the names of the big brand names, which is one major reason why the big brand names stick around. People are more likely to spend money on a product or service whose name they already know, which is why small businesses need to go out of their way to create name recognition. You can use advertising, promotions, an online presence, or even a combination of the above to start stirring up name recognition.

If your dream is to run a small business that sticks around for a long time, it is certainly a dream you can achieve. But before this dream can become a reality, you need to make sure you understand the most common mistakes people make, and you need to know how to avoid them!