Top Reasons why small businesses fail

50% of new businesses fail in the first 5 years, here’s the top reasons why:

  • They lack the power of the Force
  • They  chose the  Jedi side (if they did have the power)
  • Lack of experience
  • Ran out of funds
  • Bad Location
  • Lack of inventory management skills
  • Spent too much money on assets
  • Inadequate credit arrangements (not enough, interest too high, etc…)
  • Using business funds for personal reasons
  • Growth was too fast
  • Competition
  • Low sales volume

This entry was posted on January 8, 2008 at 9:17 am and is filed under Business Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Top Reasons why small businesses fail”

  1. Rob Says:
    January 13, 2008 at 12:15 am

    Try:

    1. Failure to focus on a specific market because of poor research
    2. Failure to control cash by carrying too much stock, paying suppliers too promptly and allowing customers too long to pay
    3. Failure to control costs ruthlessly
    4. Failure to adapt your product to meet customer needs
    5. Failure to carry out decent market research
    6. Failure to build a team that is compatible and has the skills to finance, produce sell and market
    7. Failure to pay crown taxes (PAYE and VAT)
    8. Failure of businesses need to grow. Merely attempting stability or had even less ambitious objectives, businesses which did not try to grow didn’t survive
    9. Failure to gain new markets
    10. Under-capitalisation
    11. Cashflow problems
    12. Non-payment by customers
    13. Poor sales & marketing
    14. Fatal leasing agreements
    15. Loss of financial backing
    16. Tougher market conditions
    17. Poor management
    18. Directors aiming to find new markets, but not making a single sale
    19. Companies diversifying into new, unknown areas without a clue about costs
    20. Companies finding that staff set up as rivals and stealing the business
    21. Company directors spending too much money on frivolous purposes thus using up all available capital
    22. Loss of market
    23. Tax liabilities
    24. A lack of working capital
    25. Bad debts are the cause
    26. Personal extravagance
    27. Fraud
    28. Legal disputes
    29. Falling property values
    30. Poor management
    31. Unsuitable people starting small businesses without the skills or resources they need to succeed
    32. A lack of orders
    33. A lack of control over cash flow
    34. Lack of good management
    35. Bad management of the capital available
    36. Marketing problems
    37. A failure to plan ahead, beyond the day-to-day running of the business
    38. Marketing problems
    39. General rise in costs
    40. Bad financial management
    41. Poor forward planning
    42. Too heavy reliance on grants
    43. Poor collection of debtor book such as greater than 45 days
    44. Extended lines of credit
    45. Rising work-in-progress that is not billed on time
    46. Diminished cash balances
    47. Purchase orders being made by expanding payment periods, not by cash
    48. Over-reached overdraft facilities
    49. Poor cost control with too many people responsible for purchasing
    50. Lack of long-standing relationships with suppliers
    51. The business widening its range of suppliers simply to make more credit available
    52. Rising stock levels and static sales
    53. Contract disputes
    54. Final demands and writs being received
    55. The business being reliant on one or two customers which do not pay as well as they used to
    56. Borrowings being increased just to keep the business running
    57. Outstanding debtors or potential bad debts seem to have rising suddenly
    58. The business is unsure how much it owes and how much it is owed
    59. The business is more than one month adrift in payments to the Inland Revenue or Customs and Excise
    60. The bank is calling the business to say it has exceeded its overdraft limit
    61. Under pricing
    62. Over trading
    63. Poor quality of product or service
    64. Bad labour relations
    65. Niche businesses - These suffered from narrow customer and supplier bases and an inability to react to changes in the market

  2. rotten_zet Says:
    March 26, 2008 at 3:04 am

    these 65 items are really explaining all.

    Stay as a SITH…

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