Tuesday, May 12, 2009

10 Reasons Small Business Fail

10 Reasons Small Business Fail
From the Canadian Chamber of Commerece

Small Businesses fail:
· 36% of in the first 2 years
· 55% in 5 years
· 71% within 10 years

Ten Key Reasons Why Small Businesses Fail
Potentially Fatal Errors You Must Avoid

1. Lack of an adequate, viable business plan
2. Insufficient sales to sustain your business
3. Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion
4. Inadequate capital, misuse of capital and poor cost control
5. Poor management skills: lack of delegation, leadership and/or control
6. Lack of experience and knowledge
7. Lack of managerial focus/commitment
8. Poor customer service
9. Inadequate human resource management
10. Failure to properly use professional advice: i.e. accounting, legal, financial, etc

An interesting list with no suprises. In my opinion the list is not a good representation of why business fails. And the points are not on the same levels of danger.

Number 2 ( lack of sales) is the symtom of the other points. You can do a lot of things poorly in your business as long as you generate enough sales. While not having enough sales will surely kill the business.

Number 4 (lack of captital and poor cost control) will quicken your demise. However if sales are pouring in you will enjoy a respite.

Marketing, (number 3) is the real maker or breaker of business. We've seen many business with many faults outdo better products because of superior marketing. And conversely, having a better product is never enough to succeed.

There are plenty of successful businesses with bad customer service. Lack of experience and knowlege never stopped the best entrepreneurs. Many are pioneering new territory. They learn and adapt as they go. The same observation applies to the business plan. Keep it simple and adapt it as things change.

In my opinion, more than any other reason business fails because of bad marketing.

George Torok

Host of Business in Motion

Marketing Expert and Author



Curt Skene, CHt CNLP said...

what about lack of perceived value to the customer? If the customer doesn't get you, they sure as heck aren't going to buy you!

George Torok said...

That's true Curt. And conveying that perceived value is the role of smart marketing.

Thanks for your comment.