5 Most Common Reasons Why Small Businesses Fail

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Source: U.S. Bureau of Labor Statistics

20% FAIL

Starting a small business is a dream for many people, but it also comes with many challenges and risks. 

within the first year, and 50% fail within the first five years.

BUT WHY

What are some of the common reasons why small businesses fail, and how can you avoid them? In this web story, we will explore five factors that can make or break your small business venture.

LACK OF FUNDING OR WORKING CAPITAL

Many small businesses do not have enough money to cover their operational costs, especially in the initial stages. They may also price their products or services too low to be profitable.

1

INADEQUATE MANAGEMENT

Small business owners may lack the necessary skills or experience to run a successful business. Poor management can lead to low employee morale, high turnover, customer dissatisfaction, and legal issues

2

FAULTY INFRASTRUCTURE OR BUSINESS MODEL

Some small businesses do not have a clear vision of what they want to achieve, or how they will deliver value to their customers. They may also have an unrealistic or outdated business plan.

3

UNSUCCESSFUL MARKETING INITIATIVES

Some small businesses do not invest enough time or money in marketing, or use ineffective strategies that do not reach their target audience. 

4

LOCATION

Location is a crucial factor for many types of businesses, especially those that rely on foot traffic, or proximity to suppliers & competitors. Some may choose a location that is too expensive, remote, crowded, or too competitive for their niche. 

5

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