6 Reasons Small Businesses Fail
This episode is the start of an in depth series where we will explore the six reasons that small businesses fail and what we can do to learn the lessons so we don’t become a statistic. Follow the links below to learn more about why small businesses fail.
Our podcast topic today is going to be one that’s near and dear to my heart. And that’s the reasons that businesses fail. So why is this near and dear to my heart, because I work heavily with small businesses, and I am a small business owner. So I don’t want to see anyone out there failing. And it’s usually what people come to me with the most. They’re struggling, they may not be failing as far as they consider it. But they’re on that path. Let’s just say that.
Small Businesses and Failure
So I did quite a bit of research, because I’ve heard statistics over the years. And I thought, there’s just no way that those are correct statistics. But the sobering part is that they are. So the US Bureau of Labor Statistics says that two out of three businesses with employees will last only two years. That just blows my mind. So two thirds of the people that start a business 67% are going to fail. After two years, they’re going to go out of business for whatever reason. Either they’ll be forced out of business, or they’ll decide they just don’t want to do this anymore. And then only half of business owners will last five years.
I’ve been doing this now, in May of this year. So we’re in January, right now, in May of this year, I will be doing this five years. And so I’m excited that I’ve made it to that half that makes it to five years. But there’s another statistic that 78% of businesses will fail by year 10. That is huge. So that’s saying there’s this very tiny amount, percentage wise of people that start a business that will still be doing this many years from now. And so that’s sobering to me.
But it doesn’t have to be a defeatist attitude. And it doesn’t have to be something that makes you want to give up. Because just because everybody else fails, doesn’t mean you have to. And I’m one of those that believes in, you know, fighting the status quo, I don’t want to be a statistic. So I looked at several different sites that have researched this have done lots of studies, US Bureau of Labor Statistics, and is one and different places that why these businesses are failing.
So there are 6 reasons small businesses fail. We’re gonna explore these reasons in depth, and future podcast episodes. But I just want to introduce them to you here now, so that we can talk about a little bit about why these make businesses fail. And then like I said, you can come back and listen, where we dive in deep, because I think this is so important that we examine this and we learn the lessons from others, so that we don’t find ourselves in this situation. Or if we do find ourselves in this situation, we can we know what we need to do to get out of it.
Reason#1 Small Businesses Fail
So the first reason a small business fails is leadership failure is just poor management. I mean, how many people have you met, and I’ve met a lot. That simply just don’t know, you wonder how they’re in business, because they can’t manage a business, they have no skills with managing a business, they don’t care to learn. I’m a firm believer that you don’t have to have the skills to do everything.
When you start a business, you can learn. You can learn anything in this life, if you’re just got the willingness to do it, and educate yourself. So when I started a business, I had quite a bit of management abilities. Because I had done that. In previous jobs. I had managed things, I had managed people, and processes and financials and all kinds of things. So I felt like I probably had a leg up on people in that situation. But I still had plenty to learn.
Reason#2 Small Businesses Fail
Second reason that small businesses fail is a lack of uniqueness and value. How many times have you heard that from marketing people?
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https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf
https://www.fundera.com/blog/what-percentage-of-small-businesses-fail
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