Answer 1: I really hate this question. Usually the person shouting it out knows nothing about the small business world and wants to sound all knowing. The better question is "why do small businesses stop being in business?"
There are really two types of small businesses that shut their doors so to speak. The first group and it is the smallest group are the ones that have lots of employees and lots of loans, and can not make it. Small businesses like these are startup restaurants, or other startup retail type of businesses that the owner has not done their homework.
But I would guess that 90% of all businesses that close their doors so to speak (they most likely do not have an actually have a door) do so not owning anyone any money and the owner just gets tired of it.
I have started a lot of businesses and usually as I do the research I find that I do not like the business and then close it. The cost to open the business is so small it does not matter. Or I owned it for a number of years and jut did not like it. so I closed it or sold it. But I did not leave owing anyone any money.
If you really have this fear, which is a good fear to have, then contact me and we can talk about it.
Sam Maropis
http://ChartingDreams.com
Sam@ChartingDreams.com
Answer 2: Sam, above, appears to be explaining why his own many businesses failed, but seems to have missed the question altogether. The question, however, is too broad to answer, except with many other questions...for instance:
What constitutes a failure in a business?
- The T. Eaton Company opened its doors in 1869 with the unique idea of offering people a fair price on merchandise and only one price, no haggling, and thrived for 130 years. It closed it doors due to bankruptcy in 1999, long after the death of its founder...was this a failed business?
- My neighbor opened a tiny fishing equipment store based solely on his love of the sport, with no marketing experience, no research and no hope of surviving a year - he didn't, but he enjoyed it. Was this a failure?
- Another neighbor has run a wine shop at a break-even for many years. She makes no money, but provides a great service to our neighborhood and she loves the work. Is this a failed business?
The question is unanswerable without knowing what constitutes a "failed business". Is it length of time in business, is it profit margin (or lack of profits), is it lack of enjoyment, is it an inability to achieve some goal through the business, is it burning out through too much unanticipated work. These things are in the mind of the individual.
_The U.S. Small Business Administration has seen lots of small businesses come and, unfortunately, go. According to the SBA, over 50% of small businesses fail in the first five years. Why? What goes wrong?
1. Lack of experience
2. Insufficient capital (money)
3. Poor location
4. Poor inventory management
5. Over-investment in fixed assets
6. Poor credit arrangements
7. Personal use of business funds
8. Unexpected growth
9. Competition
10. Low sales
50%
According to census bureau, in 2008, there were 27,281,452 small businesses.
50 %
Small businesses account for much of the __________ in the United States
If you are asking how many businesses are successful today then the following would apply. Over 70% of the businesses that start today will fail within the first five years. This is not to say they will make it to five years, but will fail within that time frame. Not very encouraging is it? Well, look at it this way. There Are 30% who are successful. Some of the major reasons why businesses are not successful include:* No written plan. * Not enough expertise in product being sold. * No mentor or coach. * Never had a business course. * Not enough start-up cash.
The reason most small businesses fail within two years is that they are under capitalized.
It is estimated that ninety five percent of all small businesses will fail within the first five years. The overwhelming cause of these failures is poor financial management and bad bookkeeping.
60%
50%
The government sent out the military to support the businesses
Many small businesses fail, due to a lack of a solid business plan. You really have to understand and complete all those components to get a solid direction on where you're going with your business.
managing growth. More small businesses fail from mismanaged growth than any other cause.
Eight out of every ten new businesses fail in the three years. This is for a variety of reasons most often a lack of planning for cash flow.
According to census bureau, in 2008, there were 27,281,452 small businesses.
The best thing to be known about starting a small business is that many small businesses fail within the first year. Try to find a property that will fit into your budget without hurting your chances of succeeding.
There are a couple of actual competitive disadvantages for many small businesses. One is lack of business knowledge and expertise.
Absolutely! Successful businesses cannot survive without this kind of informational resource, and it is one of the major reasons why businesses big and small fail when they either do not have it or the analyzation of what they do have is poorly done.