Reasons Why Many Small and Medium-Sized Businesses Fail to Survive

SMB Small business failure trendIt’s a known fact that small and medium sized business failures have continued to increase over the past three years. Some businesses are failing in the first three to five years. It can’t just be bad luck that causes so many companies to lose ground permanently. Below are some of the biggest reasons small and medium businesses don’t survive.


Poor Planning

To have a successful business, planning and innovation is required. The amount of pre-planning that must be done before a business starts up can be exhausting but necessary. A good business ownerwill have a good methodical and systematic approach to ensure business goals are implemented and met. Smaller companies often fail at this step. They tend to start right off without a future plan and end up far from where they expected.

Avoid Technology

Technology can enhance a business in so many ways. Small and medium sized businesses can take advantage of automated accounting, internet, e-purchasing and sending e-catalogs to their current and potential customers. When a business fails to see how important technology is in their day to day business, they won’t be able to keep up with the market demands or business goals. Businesses that don’t take advantage of things such as SEOand PPC won’t be able to stay up to date with their competition. This can lead to little or no sales.

Lack of Funds

Many small and medium sized businesses underestimate the funds they need to help the business survive. Unrealistic expectations can add to the risk of bankruptcy. All businesses need to have a very good idea of how much funding is needed for starting up a business and staying in business. Business owners have to be prepared to make an investment into the business for years before it can make good profits.
Quality
Many businesses fail because they neglect quality. Providing quality can cost the business more up front, but it will produce better results in the long run. When businesses neglect having quality, they usually experience a downfall. Doing things below quality can significantly affect your customers. Customer service is always critical for a business to survive. If customers are not given the proper attention, if they are not treated with professionalism and respect, it can be the downfall of your business. Customers who receive good customer service can be the ones who stabilize your business.
Product Range 
When businesses offer a wide variety of products, they have more chances for success. Businesses have to consistently be proactive when it comes to modifying, endorsing or even eliminating products. When a business isn’t open to new ideas, or when they are not flexible with their products, they may not be able to keep up with their competition which can lead to failure. When a customer changes what they need, the business must be ready to change the product.
Small and medium sized businesses can do well when their owners have a good bit of knowledge about systems, processes and technology. It also benefits a business owner to be skills-associated with production, distribution, cash flow and employees. Following certain practices and rules can help small and medium businesses survive.
Max Boddicker writes about business, economics & more at www.homeequityloan.net.
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