Why So Many Small Businesses Fail and How to Avoid It

Business if tough in today's world! Most small businesses go bankrupt or are closed abruptly in the first five years.
Over the course of the next five years many of the remainders also "pack up" shop and lock their doors. Why do so many
businesses fail?

The reasons lie in three main spheres. Those spheres of influence can be labeled Personal, Customer, and Operations. 

The Personal Sphere deals with the owner's personal motivation to start a business. For example, if an owner wants to
start their own business, but isn't willing to make the sacrifices necessary to make it thrive, then they are at a
disadvantage when compared to other motivated businesspeople. When a business starts for the first time often it
doesn't have a lot of money. Owners are required to sacrifice time, money, and happiness to succeed. If you can't do
that, it is unlikely that such a business will flourish. Many times owners thought they could handle the hardship but
once the novelty of "being your own boss" wears off they close the door.

The Customer Sphere is one of the most important components of your business. Without customers you do not have sales,
without sales you do not have money and without money you do not have a business. Many factors go into generating a
good customer base. In the beginning you must have a cost effective marketing strategy that targets your intended
buyers. This can be done by developing a psychological profile of your customer and then advertising in those places
that they frequent. Because it is more expensive to get a new customer than it is to keep one you must make sure they
are satisfied with your business and product. Keep in touch with them by sending them a follow-up letter with a survey. 

The Operations Sphere is only second to the Customer Sphere. In operations you must have an appropriate method of
reducing costs, keeping track of paperwork, and maintaining improvement. Operations can also take into effect the tax
paperwork, accounting, scheduling of workers, benefits or any non-producing functions.

If all of these three components are well thought out and are appropriately designed you will increases your chances of
survival. Failure to understand the integral details of your business and what it takes to succeed may mean failure in
the long run. If you are having difficulty putting all the pieces together then consider a small business consultant.