Reasons Why small business fail | bulb and key


Reasons Why Small Businesses Fail

Ashlesha Karande

Story By: Writer, Blogger

"To live a pure unselfish life, one must count nothing as ones own in the midst of abundance. "

- Buddha


Entrepreneurship is inherently a risky sector and running a business for the first time will definitely be a roller coaster ride. And a small business is basically a dream which is starting to make a difference. The ability to bring a product or service to market according to public demand and suitable price. According to small business administration a large number of companies fail during its 18 months of work. The most common reason for failure of small business is lack of funds which leads to lack of management team and a proper infrastructure. Small business will be a success if you have a goal and a set of rigid objectives to achieve the goal in a planned timeline. Learn from others mistakes, and try to face the obstacles in business with a proper business plan. 




Here are some reasons why small business fail


  • Insufficient funds:


Insufficient funds | bulb and key


Finance is the first step to start a business, it doesn’t matter if the business is small or large you need capital which will run the business. Traditional funding will not fulfill the demand of today’s business strategies, you have to be open to a wide range of options like loans for the working capital and other expenses. Your business cash flow depends on the ability to sell a product, a well managed inventory, and your zeal to grow the business. Make your current assets larger than current liabilities to build the working capital. Also the customers you are targeting will affect the capital flow, if your customers are slow payers it is going to affect the cash flow and it is an unsustainable flow of capital. So, don’t be anxious and plan a realistic budget for your business and be prepared to spend from your pockets at the initial stage of business. 


  • Failed business idea:


Failed business idea | bulb and key


Many think business planning is overrated and just overlook the fact about having a rough plan initially before starting a business. But in reality the planning of business according to the desired goals simultaneously keeping the business idea in mind a necessary step. Have a realistic idea, because when you have a preposterous idea it might sound fun but eventually end up as a big fail. Have proper and thorough research for your business, especially look into legal matters along with laws and regulation in the city or state where you are starting the business. Start a business which will continue even after the PR slows down and don’t forget to execute the idea once before the final business setup.




  • Poor management:


Poor management | bulb and key


A lack of business acuity, held by a management team leads to business failure for sure. Your past work experience won’t be sufficient to run a business, you have to have a proper management team. Finance, purchasing, selling and production team needs to be managed simultaneously and only the business owner will not be able to concentrate on all teams and hence need a manager for management to avoid complexities in working of business.


  • Marketing:


Marketing | bulb and key


Your company’s online location and social media footprint is as important as the physical location of the business. Marketing is the bridge which will connect you to the customers and presenting your business in a creative way will attract a large number of consumers. Target the audience who need your products, and reach the right people and plan your marketing strategy accordingly. Choose the market wisely and go for a large market which will have an exposure to a variety of people instead of small markets where there could be a less targeted audience. Although the size of the market you choose completely depends on the product you are selling.




  • Inventory management:


What is Inventory | bulb and key


Keeping a track of profits and loss, inventory, sales is important for any company and for small business inventory softwares is kind of critical. Inventory is basically all math, the data of the inventory sheet and its analysis, but you do not have to be an expert as many softwares are available which can be used to do this task and it is completely automated. Not keeping track of order and deliveries, customer services,  theft control and financial management will make your business fail and you won’t be able to analyse the ability of your  business  profitability. 


  • Lack of data:


Lack of data | bulb and key


Cyber crimes are happening everyday and are affecting not only big companies but they are also targeting small businesses. Data loss results in loss in money and time to recover the lost data which was accidentally deleted or got corrupted. Data is a necessary part as it helps in better decision making, like keeping data of customers, market trends to follow etc. Also helps in solving problems after a rough performing month by tracking and reviewing the performance breakdown. A data driven business will be a success no matter what obstacles you have.


‘Small business are the heartbeats of your neighbourhood, the spine of your local economy and spirit of your town’.




Ashlesha Karande

Story By:

50 thoughts on “Reasons Why Small Businesses Fail

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