Top 10 reasons why small businesses fail and how to avoid them Lack of research. Not having the business finance they need. Not being aware of customer or competition needs Many reports of business failures cite mismanagement as the main reason for failure. Startup owners often lack the relevant business and management knowledge in areas such as finance, purchasing, selling, production, and hiring and managing employees.
If the business owner doesn't recognize what they're not doing well and seeks help, the company can fail and shut down. To fix the problem, small business owners can learn about the skills they lack, hire qualified employees, or outsource the work to competent professionals. Starting a business can be the key to financial independence or the path to ruin. The statistics on start-ups are certainly discouraging, as around 90 percent of new companies end up closing their doors for good.
According to Elizabeth Wilson, of Entrepreneur Magazine, although some 40 million companies are created every year, a measly 350,000 separate themselves from the rest and begin to grow and earn money. Making sure your own company is among the richest 10 percent means avoiding some of the most common business pitfalls.