10 Common Reasons For Small Business Failure

1,168 views

Published on

In this presentation we examine the top ten reasons cited by SBA for business failure. Seven out of ten reasons are credit related.

Published in: Business, Economy & Finance
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,168
On SlideShare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
70
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

10 Common Reasons For Small Business Failure

  1. 1. 10 Common Reasons for Small Business Failures ©2013 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
  2. 2. Small Business Survival Rate (7 out of 10) 2 Years 5 Years 10 Years 15 Years (Half) (a third) (a quarter) 7 out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years and only one quarter stay in business fifteen years or more. Source: SBA ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 2
  3. 3. Lack of Experience #10  Do what you do well  Entrepreneurs must have experience  Be able to anticipate challenges  Possess an awareness of the products, services and the market ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 3
  4. 4. Insufficient capital #9  “Cash is King”  With tightened lending policies, harder to obtain business loans  Focus on cash flow generation to be properly capitalized  Maintain adequate reserves ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 4
  5. 5. Poor location #8  “Location, Location, Location”  Understand where target customers work or live  Traffic conditions, accessibility & parking  Relation to competitors  Building condition & curb appeal ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 5
  6. 6. Poor inventory management #7  Some are tempted to over-buy on essentials  Draining working capital, eroding profit  Make forecast projections  Tying line of credit to these items frees working capital for other needs ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 6
  7. 7. Over-investment in fixed assets #6  Fixed assets are usually always a requirement  Evaluate usefulness and necessity before buying them  Consider leasing vs. purchasing  Costly fixed assets may result in poor cash flow ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 7
  8. 8. Poor credit arrangements #5  Negotiate flexible terms from suppliers, avoid late fees  Critical for businesses to ensure terms are clear and easy to understand  Giving customers too much time to pay bills can affect cash flow  Business owners should keep tabs on their business credit score ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 8
  9. 9. Personal use of business funds #4  Many small business owners use personal credit  Places the owner at risk  Some business owners use business credit card to cover personal expenses  Consider forming LLC or corporation to shield from personal liability ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 9
  10. 10. Unexpected growth #3  Slow but steady growth preferred  Going after all the business can sometimes drain cash and reduce profitability  Sudden ramp-up requires up-front cost of inventories  Causes business to sometimes be less selective, exposing the business to potential credit risk ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 10
  11. 11. Competition #2  Creates choices for consumers  Study your competitors  Take the high road to success trashing the competition is never a good idea.  Focus energy on taking care of your customers  Using business credit wisely - one of the best ways to succeed in a competitive marketplace ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 11
  12. 12. Low sales #1  The ultimate measure of success is sales  Low sales can result from inferior products or services, lack of understanding, mis-reading competition  Overpricing goods and services  Keeping an under-performing sales team  Course correct or fail ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 12
  13. 13. Small Business Resources Find Business Loans Business Credit Reports Business Valuation Bill Payment ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 13
  14. 14. Find a Small Business Loan ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 14
  15. 15. Business Valuation ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 15
  16. 16. Manage Your Cash Flow ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 16
  17. 17. Business Credit Reports  Businesses, accountants and administrators find Experian's business credit reports and subscriptions to be the best value, giving you the choice to instantly monitor your business credit reputation, or evaluate business backgrounds and credit scores.  Experian has 4 small-business reporting options tailored for your specific needs: www.smartbusinessreports.com Business Credit Report℠ Business Credit Advantage℠ Business Credit Pro℠ BusinessIQ Express℠ • Pay as you go for a single credit report on any business in the U.S. — up to $49.95 each • Monitor the health of your business with access to your report and email alerts — all for only $129 per year! • Access credit scores to make insightful decisions about other companies — all for $150 per month! • Evaluate, rate and monitor your business customers and suppliers — all for only $750 per year! ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 17
  18. 18. www.experian.com/b2b ©2013 Experian Information Solutions, Inc. All rights reserved. Experian Public. 18

×