Why Do Small Businesses Fail?

Many people dream of running their own small business, but if you look at the statistics, you will find that most small businesses fail. In fact, less than 5% of small businesses are still in action just 10 years down the road from their initial startup date. If you own or plan to own a small business of your own someday, you can avoid failure yourself by becoming aware of the major mistakes so many small businesses make.

Poor location: Most small businesses exist with a physical location, which makes their location an important element of survival. Lots of people jump the gun on starting their small business because they are so excited and filled with anticipation. Too many people ignore the fact that once they choose a location, they are likely to remain in that location, and instead of waiting for the "right place" to open up, they take whatever is available. Another motivation for people to take a lesser location is because of a lower price; but the extra money for a good location will pay dividends in the long run!

Saving money: "Saving money" on a location is not the only way small businesses try to save money early on. Lots of small businesses hurt themselves in the long run by saving money in the present on presentation or creation. If you want people to spend money on your product or service, you need to first spend money to make it good and appealing!

Name recognition: Consumers already know the names of the big brand names, which is one major reason why the big brand names stick around. Small businesses need to learn the importance of going out of their way to create name recognition, as consumers are far more likely to part with their money when it is going to a name they know. Whether this occurs through advertising, promotions, an online presence, or some combination of the above, it is extremely important to pursue.

You can certainly achieve your dream of running a small business that sticks around for a while. But before this dream can become a reality, you need to make sure you understand the most common mistakes people make, and you need to know how to avoid them!

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