Failure Planning & Strategy

6 Reasons Small Businesses Fail, And How To Avoid Them

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fail-300x232  The idea of starting up a small business of your own probably sounds like a great one. You get to be your own boss, work your own hours, and make more money than you may have otherwise. When you first start up your small business you think that nothing can go wrong. Unfortunately, many small business fall through. Sometimes even before they have been able to get up and running. In order to avoid your own small business failing, check out these six reasons why this commonly occurs.

1. Inadequate Funds

It takes a lot of money to get your business up and running. You won’t have any real profit at the start, so you have to make sure you have enough funds to go off of until you do start making money. Without this funding supplies can not be bought, products can not be created, and neither employees nor bills can be paid.

How To Avoid It: Ensure you have enough money to start up and run your business for six months prior to launch. This will help to keep your business afloat until you start making some real profit. The exact funding will vary from business to business so it is up to you to make estimations on what this number will be. Applying forΒ small business loans in Florida is also a strategic way to gain access to the funds that you need, when you need them, if you don’t have quite enough cash saved up in reserves.

2. Unrealistic Expectations

Many people go into running their own business with unrealistic expectations. Here are just a few of those unrealistic expectations:

  • Your business will be an overnight success.
  • You will have a famous company within a few months, or even a year.
  • Nothing will go wrong.
  • Everyone will have to buy your products or services.
  • You will not need toΒ  hire anyone on to help you- or maybe you will only have to hire one person to help with your whole business.
  • You will make a ton of money.
  • Running your business from home will allow you to have a ton of free time.

Having unrealistic expectations like the ones listed above are the number one reason small businesses fail. You will literally be sabotaging your own business efforts.

How To Avoid It: Be realistic. Know that making your business successful takes a lot of time and effort. It will not happen overnight. Also know that you will need help in the start up and running of your business. You can not do it all.

3. A Faulty Business Plan

If you don’t create a goodΒ  business plan, there is no way your business will prosper. Leaving out even the tiniest of details in your business plan can lead to a lack of funding. It’s not just that, however. Plenty of other things can go wrong which, in the end, can cause a small business to fail. Even the smallest of details are of the utmost importance. If you aren’t sure how to craft a business plan on your own, don’t feel bad about enlisting the help of someone who does.

How To Avoid It: Ensure that you have gone over every little detail in your business plan. Have a professional double check it to ensure accuracy. A professional will also be able to give you solid advice on whether or not your business plan will succeed or fail.

4. Lack of Skills

Sometimes the reason a smallΒ  business fails is as simple as the owner lacking the appropriate skills. While you can always hire professionals to help you out, not many owners will have the type of funding necessary. A small business owner has to wear many shoes. They play the roles of customer service associate, manager, book keeper, cashier, and countless other jobs. If an owner doesn’t have the skills necessary to complete all of these tasks they will undoubtedly run into some very serious problems.

How To Avoid It: Prior to launching your business it is recommended that you take a few courses on how to run a business. You may also want to take a short course on accounting basics. You can also hire a variety of professionals to help make up for the skills you lack.

5. Bad Marketing

Marketing is one of the most important aspects of business. It doesn’t matter that you have a great product or service if no one knows about it. Bad marketing can lead a small business to absolutely plummet. Upping your marketing game can sometimes mean the difference between a successful business and a total failure. If you are not a skilled marketer it is highly suggested that you hire someone who is to help you in your endeavors.

How To Avoid It: Read up on good marketing practices. Do plenty of research on what has or has not worked for companies in your niche. Take a marketing course or two. When all else fails, hire a professional who can help with your marketing.

6. Cookie Cutter Company

The sad truth is that there are so many cookie cutter companies out in the world right now. These companies offer the same products or services, market in the same way, and basically mimic one another in every aspect of business. This simply does not work if you want to have a truly successful business. You have to offer your customers something new, something unique…something they can not find anywhere else. If your business does not do that, you might as well not start up at all.

How To Avoid It: Before you launch your business, make sure you have something that your competition does not. It can be anything, just so long as it is different. Use your creativity to set you and your company apart from all of the rest.


There are many reasons why a small business fails. The sad truth is that it is incredibly easy to avoid many of them. Keep these tips handy so that your small business isn’t one of the many who fails.

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