How to Start a Business - Why Small Businesses Fail
Article Index
How to Start a Business
How to Start a Small Business
Why Small Businesses Fail
Part 1: The Executive Summary
Part 2: Market Analysis
Part 3: Company Description
Part 4: Organization And Management
Part 5: Marketing and Sales Strategies
Part 6: Service or Product Line
Part 7: Funding Request
Part 8: Financial
Part 9: The Appendix
Key Points to Consider
All Pages

Why Small Businesses Fail

Success in business is never automatic. It isn't strictly based on luck - although a little never hurts. It depends primarily on the owner's foresight and organization. Even then, of course, there are no guarantees.

Starting a small business is always risky, and the chance of success is slim. In fact majority of new businesses fail within the first few years.

The following are some reasons for small business failures:

  • Lack of experience
  • Lack of business skills
  • Insufficient capital (money)
  • Poor location
  • Poor inventory management
  • Over-investment in fixed assets
  • Poor credit arrangements
  • Personal use of business funds
  • Unexpected growth
  • Competition
  • Low sales


Success can be yours if you are patient, willing to work hard, and take all the necessary steps!

On the Upside

It's true that there are many reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.

  • You will be your own boss.
  • Hard work and long hours directly benefit you, rather than increasing profits for someone else.
  • Earning and growth potential are far greater.
  • A new venture is as exciting as it is risky.
  • Running a business provides endless challenge and opportunities for learning


Write a Business Plan

Essential Elements of a Good Business Plan for Growing Companies

A business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan.
As any good salesperson knows, you have to know everything you can about your products or services in order to persuade someone to buy them. In this discussion, you are the salesperson and your products represent your business. Your customers are potential investors and employees. Since you want your customers to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.

To become an expert (or to fine-tune your knowledge if you already believe you are one), you must be willing to roll up your sleeves and begin digging through information. Since not all information that you gather will be relevant to the development of your business plan, it will help you to know what you are looking for before you get started. In order to help you with this process, we have developed an outline of the essential elements a good business plan.

Every successful business plan should include something about each of the following areas, since these are what make up the essentials of a good business plan:

  • Executive Summary
  • Market Analysis
  • Company Description
  • Organization & Management
  • Marketing & Sales Management
  • Service or Product Line
  • Funding Request
  • Financial
  • Appendix