We’ve all heard the statistics about start-ups and small businesses.  There’s a lot of doom-and-gloom out there about the possibility of success.  When we first went to the bank to establish accounts for the Berry-Brewer Freelance Agency, I was surprised when the account manager told us that most entrepreneurs fail because they don’t plan for taxes.  I’ve been mulling on this ever since and have been really curious about other people’s takes on why so many small businesses don’t make it past the first few years.   

Let’s take a look at some of the top reasons that small businesses fail.  Try to consider realistically if each reason should be a concern to you.  The good news is that most of these problems are avoidable, as long as we are prepared for and willing to work around them. 

1.  Money.  Whether you don’t have enough to properly start a business, or you just do a poor job of managing it, money issues are one of the biggest downfalls of a small business.   

2.  Planning.  Also topping the list of culprits is a lack of planning on the entrepreneur’s part.  If you don’t have a business plan, you need to develop one.  This item is closely tied to the money issue, as business owners need to plan for where, when, and how much to spend in order to ensure that the doors stay open. 

3.  Competition.  Not only should you research your competition in the planning phase, but you also need to keep current once you’re up and running.  If you’re losing customers to the competition, the best thing you can do is find out why!  Not only do you want to know how best to compete in their areas of expertise, but you also want to determine what is going to set you apart from (and above) what they’re doing. 

4.  Pricing.  One of the hardest parts of starting your own business is knowing how to set the best prices.  You may be tempted to “lowball” the competition and end up not making enough money, or you may overvalue your service to the point where you don’t make the sale.   

5.  Marketing.  It is so easy these days to purchase a business license and set up a website, that sometimes entrepreneurs forget there’s more to marketing than slapping some copy up on the internet.  Marketing is a complicated beast, and most of us are fumbling about in the dark when it comes to marketing our small businesses.  If you aren’t able to hire a marketing professional, build some basic skills through your local library and online resources.   

6.  Inexperience.  This is one problem that can bite the entrepreneur in so many ways.  Perhaps you don’t have any experience in your chosen field.  Obviously, this can hurt when you’re competing against businesses that have been around for years.  A lack of management experience can hurt a business, too, as you may either find yourself trying to have too much control over daily functions or even delegating too many of the responsibilities that should actually be yours. 

7.  Sales.  Whether you’re selling a product or a service, your business won’t survive without customers.  Unfortunately, many entrepreneurs are great with ideas but somewhat lacking in sales abilities.  In your excitement, you may also have overestimated how much business you were really going to get in the early stages of operation. 

8.  Business records.  Most entrepreneurs are excited about their businesses for two reasons.  First of all, they like the challenge and excitement that comes from building their own destinies.  Secondly, they truly enjoy the field they’re entering.  Notice that “keeping meticulous business records” is not on that list.  These records are vital to your business, though.  Not only do they help you stay compliant with government regulations, but they can also help direct the future of your business by creating a clear picture of where you’ve been and where you are. 

9.  Dependence.  Too often, a small business will become reliant on one or two customers.  While having a steady customer is a great place to start your endeavor (it beats not having any customers, after all), it’s not enough to sustain you for long.  It is vital that you continue reaching out to grow your customer base. 

10.  Burnout.  After reading this list, it’s not hard to see that many entrepreneurs just plain get burned-out.  You have to be a marketer, a manager, a financial planner, and a sales professional; and that’s all before you even get to do the “work!”  Once you get to the point of engaging in your business, you may find yourself working ridiculously long hours in order to build momentum.  In some cases, the burnout leads to “entrepreneur fatigue,” and you end up procrastinating or just not getting things done.  Both mean the death of your small business. 

Of course, there are many reasons that a small business can struggle and even fail.  These are some of the most often-cited causes given by those who have “been there and done that.”  Here’s our opportunity to learn from their experiences and avoid the same pitfalls with our endeavors. 

At this point, I have a confession to make.  I hate lists like this that tell you all of the problems you’re likely to experience but scrupulously avoid offering any actual advice.  For that reason, in the next few weeks, we will focus on several of these items and offer some suggestions for real solutions.  Very few—if any—of them are insurmountable.  If you have ideas that you feel would be helpful to other readers (or to the writers, for that matter!), please email them to us at berrybreweradmin (at) gmail (dot) com.

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