Why Small Businesses Fail, And How To Save Yours


Only around half of new businesses survive their first few years, and only about a third of those will manage another five.

Although starting a business is easier than it has been in the past, it’s still a very tough market out there! In this post, we’ll go over some of the most common reasons why small businesses fail, and some advice on how to avoid them.


Poor Leadership

It isn’t pleasant to consider this, but you may be the biggest threat to your business’s future success.

Small businesses consistently fail when their owners exhibit bad management skills, which can present themselves in many different forms.

Some owners simply struggle with their lack of experience in making managerial decisions, supervising staff, and generally leading organizations towards their overarching vision.

You may have a head full of great ideas, but if your leadership style is dysfunctional, it’s going to affect every other facet of the business.

Study hard and learn about effective leadership, finding a mentor or enrolling in training where it’s necessary.

There may be certain nuances tied to your specific industry, so you might want to do some detective work on the leadership of your most successful competitors. Whatever you can do to enhance your leadership skills, do it!


Avoiding Outsourcing at All Costs

The fact that you started a business in the first place means you probably like being in control.

That’s why you decided you were finally going to break free from the authority of your boss, right?  This can have some beneficial aspects to it, but can also lead some business owners to avoid outsourcing like the plague.

This is a big mistake.

You need to be devoting as much time and resources as possible to the core processes of your business in the early stages, and running a difficult and expensive recruitment drive, rather than sacrificing some control and outsourcing some processes, is always going to strain your precious time.

If you need a website, go looking for a small business web design company. If the business’s cash flow is getting too much to handle by yourself, outsource that work to an accounting firm or freelance bookkeeper.

As long as you’re screening the businesses thoroughly and not outsourcing the things that will make your business unique, outsourcing is a very smart move in the early stages.




Growth and expansion aren’t universally good things.

Yes, expanding your horizons may be part of the business plan, but if you expand too quickly in too short a space of time, you can wind up in over your head, and lose your grip on the business, leading to failure.

Before even the smallest act of expansion, make sure you’re conducting thorough research and planning. Measure the relevant demographics and buying trends, any future development plans for localities you’re hoping to tap into, and any other pertinent issues before you lock yourself into moving ahead.

Don’t be too impatient to hold onto your capital, and take things slow. This is usually the smarter choice.

So why is your business failing?  If not have you ever dealt with this situation?  Share your comments below.


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