Small Business Failure

Don't Let Business Die Young Part 3

Written by Jay Shapiro for Gaebler Ventures

It might seem negative to think about the possibility of failure when you're starting up a business. But by doing so you are more likely to be able to avoid the main pitfalls that put many well-intentioned concerns out of action. Once again, just as deadly sins come in batches of seven, so too do the reasons businesses fail.

Let's close out our conversation on why start-up ventures don't make it.

Planning problems, the inability to manage growth well and digital ineptitude are three additional threats to business longevity.

Let's do a deep dive on these existential entrepreneurial threats.

Poor Planning or Lack of It

All major successful endeavors are built on a foundation of good planning. Without methodical strategies, coupled with hard work, success isn't a possibility.

It's really important for all businesses, no matter what their size, to have a clear business plan. A frightening number of small concerns fail because of elementary deficiencies in business planning. A business plan needs to be realistic and it should be based on precise, up to date information and erudite projections for the business in the future.

Considerations for your business plan:

  • Describe the business, its vision, its goals, and its keys to success
  • The needs of the work force.
  • Possible problems and possible solutions.
  • Finances: capital investment, equipment and supplies, balance sheets, income statements, cash flow analysis, and sales and expense forecasts.
  • Careful analysis of the competitors.
  • Marketing, promotions and advertising.
  • Budget and company growth management.

A business plan is something most bankers require when considering lending you capital so it's worth writing up a good one.

Getting Too Big Too Fast

There's a little bit of big fish, small fish going on here. Much business failure can be blamed on overexpansion. It's not unusual for business owners to see their first flush of success as an indication of the need to expand. But often this happens too fast and rather than be the big fish in a small pond they find they are suddenly a small fish in a bigger one. Slow and gradual growth is recommended. You could use the adage, running before you can walk, here. Rapid growth often leads nowhere but bankruptcy.

That's not to say that growth should be suppressed. As long as you have a strong and established customer base and steady cash flow, you can look at growth but keep expansion at a realistic and measured pace. If you find yourself unable to meet customer needs then expansion may be the answer.

If expansion is justifiable following careful review and analysis, identify your needs. Will you need extra staff, or are you looking to increase production? With the correct systems and staffing in operation, you can concentrate on the growth and enhancement of the business, without having to attempt to attend to everything yourself.

No Web Presence

Every business these days needs a website.

A professional looking site that provides valuable information in an easy to find way is the minimum requirement of any business. Expanding the site so that you can generate revenue from it or include an online shop will further benefit the business. Many business owner mistakenly believe that their bricks and mortar profile is the one they should focus on. In actual fact, even if you business operates predominantly in the 'actual world' online support is still valuable.

If you don't enhance your business with a website, you'll very likely lose business to other companies that do. Make sure that your website shows your business in the best possible light - after all you want to raise the amount of revenue you generate, not lessen it.

Keep the Faith

Despite all these possible points of failure, don't worry. You can make your venture a success.

The success of each new business is an individual thing - the secret of your success is yours alone and your formula, what works for you, might not have the same effect on another's business. Work that!

Jay Shapiro is a freelance writer based in the UK. Jay has a particular interest in the emotive aspects of the entrepreneur's character. "Alongside the nuts and bolts of business, the character of the person is often the ingredient responsible for success."

Share this article

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities


Business Glossary


Conversation Board

We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.

Leave a Reply

Questions, Comments, Tips, and Advice

Email will not be posted or shared
Code Image - Please contact webmaster if you have problems seeing this image code

Problem Viewing Image? Load New Code