“Twelve Causes For Small Business Failures, According To Your Strategic Thinking Business Coach”
“Twelve Causes For Small Business Failures, According To Your Strategic Thinking Business Coach”
By: J. Glenn Ebersole, Jr., Chief Executive of J. G. Ebersole Associates and The Renaissance Group ™
On a regular basis I meet or am contacted by someone who wants to start his or her own business. Typically the person has specific skills and experience in a specific industry, but lacks business management experience and self-employment experience. The vast majority of them are in fact totally naïve about how business really works.
The failure rate for small business is the subject of much discussion. Frankly speaking, there are many myths and half-truths about small business failure rates due to the absence of solid reliable statistical evidence. In researching the failure rate of small businesses, I went to the SBA (Small Business Administration) Office of Advocacy at www.sba.gov/advo and found that two thirds of new employer establishments survive at least 2 years and 44% survive at least 4 years. This is based upon a study of firms started in the 2nd quarter of 1998 and tracked for 16 quarters.
Based upon my research and personal observations as a strategic thinking business coach, here are 12 causes for small business failures.
1. Poor planning - The lack of a strategic business plan to help focus on vision, mission and goals.
2. Inadequate capital - The lack of adequate startup capital that has not included enough money to live for one or two years without income when getting the business started.
3. No prior business experience - The lack of experience running a business or in the industry entered.
4. Ineffective marketing – The lack of a strategic Integrated Marketing Communications (IMC) Plan.
5. Competition – The lack of understanding of whom the competition is and what their strengths and weaknesses are.
6. Poor customer service – The lack of commitment to first class and reliable service to customers.
7. Poor record keeping and financial controls – The lack of up-to-date, well documented financial and business records.
8. Limited product, services and/or clients. – Small business owners fall prey to clinging to one big client, one product or one service, rather than a variety and diversification, which serves as a risk management too against the ups and downs of business cycles.
9. Opportunistic marketing only – Entrepreneurs often get excited over any new opportunity and start pursuing a new opportunity without using strategic thinking to test the opportunity against the vision, mission and goals of the strategic business plan.
10. Poor time management – Lack of discipline and commitment to do tasks that need to be done on time.
11. Poor quality – Lack of a standard for quality of products and services.
12. Burnout – Owning a business with a significant investment of time, money, energy and emotion results in working long days and not taking time off. And not balancing your business life and your personal life will cause burnout and cause your motivation and creativity to suffer.
In reviewing the above list, did you recognize any of these causes for failure becoming apparent in your business? If you answered YES, you may have activated a warning system indicating a need to determine why your business is not growing and thriving. If you have detected a warning sign of potential failure in your business or organization and want to discuss what it takes to turn your business around, please contact Glenn Ebersole today through his website at www.businesscoach4u.com or by email at jgecoach@aol.com.
Twelve Causes For Small Business Failures According To Your Strategic Thinking Business Coach - To learn more about this author, visit Glenn Ebersole's Website.
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“Twelve Causes For Small Business Failures, According To Your Strategic Thinking Business Coach”
By: J. Glenn Ebersole, Jr., Chief Executive of J. G. Ebersole Associates and The Renaissance Group ™
On a regular basis I meet or am contacted by someone who wants to start his or her own business. Typically the person has specific skills and experience in a specific industry, but lacks business management experience and self-employment experience. The vast majority of them are in fact totally naïve about how business really works.
The failure rate for small business is the subject of much discussion. Frankly speaking, there are many myths and half-truths about small business failure rates due to the absence of solid reliable statistical evidence. In researching the failure rate of small businesses, I went to the SBA (Small Business Administration) Office of Advocacy at www.sba.gov/advo and found that two thirds of new employer establishments survive at least 2 years and 44% survive at least 4 years. This is based upon a study of firms started in the 2nd quarter of 1998 and tracked for 16 quarters.
Based upon my research and personal observations as a strategic thinking business coach, here are 12 causes for small business failures.
1. Poor planning - The lack of a strategic business plan to help focus on vision, mission and goals.
2. Inadequate capital - The lack of adequate startup capital that has not included enough money to live for one or two years without income when getting the business started.
3. No prior business experience - The lack of experience running a business or in the industry entered.
4. Ineffective marketing – The lack of a strategic Integrated Marketing Communications (IMC) Plan.
5. Competition – The lack of understanding of whom the competition is and what their strengths and weaknesses are.
6. Poor customer service – The lack of commitment to first class and reliable service to customers.
7. Poor record keeping and financial controls – The lack of up-to-date, well documented financial and business records.
8. Limited product, services and/or clients. – Small business owners fall prey to clinging to one big client, one product or one service, rather than a variety and diversification, which serves as a risk management too against the ups and downs of business cycles.
9. Opportunistic marketing only – Entrepreneurs often get excited over any new opportunity and start pursuing a new opportunity without using strategic thinking to test the opportunity against the vision, mission and goals of the strategic business plan.
10. Poor time management – Lack of discipline and commitment to do tasks that need to be done on time.
11. Poor quality – Lack of a standard for quality of products and services.
12. Burnout – Owning a business with a significant investment of time, money, energy and emotion results in working long days and not taking time off. And not balancing your business life and your personal life will cause burnout and cause your motivation and creativity to suffer.
In reviewing the above list, did you recognize any of these causes for failure becoming apparent in your business? If you answered YES, you may have activated a warning system indicating a need to determine why your business is not growing and thriving. If you have detected a warning sign of potential failure in your business or organization and want to discuss what it takes to turn your business around, please contact Glenn Ebersole today through his website at www.businesscoach4u.com or by email at jgecoach@aol.com.
Twelve Causes For Small Business Failures According To Your Strategic Thinking Business Coach - To learn more about this author, visit Glenn Ebersole's Website.
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