Top 7 Reasons Why Small Businesses Fail 2017

No one starts a business looking for it to fail. However, according to statistics, just one-third of small businesses end up celebrating their 10-year anniversary in business.

In fact, by five years, almost half of new businesses would have already closed doors. So, what is the reason for business failure?

There are numerous reasons small businesses fail. Some problems are actually easily avoidable – failure isn’t a question of luck.

Here are some top reasons small businesses fail. By understanding failure, small businesses can better avoid it.

Top 7 Reasons Why Small Businesses Fail


1) Not Starting For The Right Reasons

Reasons Why Small Businesses Fail

Being a business owner is difficult. The days are going to be long, you need to juggle a lot of things and success can seem like a dream you can’t catch. Being a successful entrepreneur also requires a lot of skill. Running a business is not the same as working for someone else and being good at it.

Therefore, it’s important to carefully consider why you are getting into the business.

You shouldn’t get into running a small business just because you think it is going to give you a lot of money. You also shouldn’t do it just because you think it’s easier.

Business requires a lot of passion and drive – you need to be willing to learn and keep moving forward even when it isn’t easy.


2) Not Having Enough Capital

Reasons Why Small Businesses Fail

Now, money is a big reason small businesses fail. But it isn’t always that there isn’t enough money to get around but businesses failing to fundraise the right way.

Not all businesses are investment ready – you don’t always even need to raise money in order to move forward.

It is possible to run a business without a huge amount of capital. Business owners need to be thrifty and check out offers and free software through

You also need to make sure to raise money for the right reasons and at the right time.


3) Not Taking Time To Scale Properly

Reasons Why Small Businesses Fail

Small businesses can make two crucial mistakes in terms of scaling. There are some businesses that are afraid to do it and because they don’t start scaling, they stop growing and eventually someone bigger will come and take over.

On the other hand, the majority tend to be the aggressive ones. These businesses think that scaling fast is the only way to go but they are not scaling when the figures tell them.

They hire more personnel and increase stock even when the projections are not suggesting big growth or demand.


4) Not Advertising Online

Reasons Why Small Businesses Fail

In the modern world, online marketing is the key to salvation. It is crucial for a small business to be online, even if the business is a local brick-and-mortar store. Online marketing has too many benefits for businesses to pass.

It is inexpensive and easy – you don’t need to spend a lot of money to get good at online marketing. Sites like are full of information on how to take care of online marketing.


5) Not Remember To Lead

Reasons Why Small Businesses Fail

A business always needs a leader – without one the organization will be in chaos and out of focus. Many entrepreneurs don’t realize the importance of leadership skills. They assume that things will just fall in place and the key thing for success is just sales.

But effective management is going to lead to a situation where morale is better and productivity is increased. Good leaders are able to influence people’s opinions and narrow the business focus on the right things.

It’s important to learn about leadership not just about finances and manufacturing when running a small business.


6) Not Accepting Help

Reasons Why Small Businesses Fail

Small business owners can be stubborn and sometimes to their own downfall. It might seem like it is you against the world as a business owner, but the reality is different.

Businesses need other people and they need other businesses – if you want to make it in the world of business, you need to accept and seek help.


7) Not Doing Your Own Thing

Reasons Why Small Businesses Fail

One common problem among small businesses is the lack of differentiation and strength to follow their own road. First, in terms of differentiation, businesses don’t always understand the importance of being unique from the competition.

Your product or service has to have a unique selling point – something that makes it different from everything else. This is as true with technology firms as it is with plumbers.

In addition, you also need to follow your own path and make decisions that are good for your business. You can’t just look at successful businesses and copy their choices in terms of business model and scaling, for example. What has worked for someone else doesn’t necessarily mean it’ll work for you.

If you want to make it in the world of small business, then you need to avoid the above. Top reasons small businesses fail are not down to luck or bad product design – they are often avoidable issues that just require careful planning.

If you are thinking about starting a business, just plan your actions carefully and make sure you are in it for the right reasons.

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