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.

NOTE: This came from the SCORE web site

1. Poor cash flow management skills/poor understanding of cash flow 82%
2. Starting out with too little money 79%
3. 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%
4. Not pricing properly – failure to include all necessary items when setting prices 77%
5. Being overly optimistic – about achievable sales, money required, etc. to do the things that need to be done to be successful, etc. 73%
6. Ineffective prioritization for the use of both time and money 64%
7. Not recognizing, or ignoring, what they don’t do well and not seeking help from those who do 70%
8. Denying problems in the business until it’s too late 66%
9. Minimizing the importance of promoting the business properly (marketing) 65%
10. Insufficient relevant and applicable business experience 63%
11. Insufficient entrepreneurial instinct about how to run a business 63%
12. Not paying attention to the plan after it’s developed 60%
13. Inability to delegate properly – micro-managing work given to others or over-delegating and abdicating important management responsibilities 58%
14. Hiring the wrong people – clones of themselves and not people with complimentary skills, or hiring friends and relatives 56%
15. Falling in love with their idea and losing objectivity and customer focus 55%
16. Poor people management skills 54%
17. Not understanding or recognizing, or ignoring competition 53%
18. Not knowing when to hire or fire employees 48%
19. Too much focus and reliance on one customer/client 47%

Are you dealing with any of these issues right now? If so call me to see how I can help. There is no charge for this discussion.

Ron Finklestein

info@yourbusinesscoach.net

330-990-0788