2. As an Entrepreneur myself I believe the reasons behind why small
businesses fail are the following. The first reason is that the
entrepreneur does not do any research before starting up the
business, the second reason is that the entrepreneur has little or no
knowledge of accounting, the third reason is the owner did not make a
proper business plan, the fourth reason is that the owner does not
have proper financing the fifth reason may be the owner is not a risk
taker and the last reason is that the owner does not have an exist
strategy.
The first reason I said was that the owner not doing proper research
this will cost the small business to fail because the owner does not
know whether the market is demanding his product or whether the
location where he opens his business in has more supply then demand
or vise versa in the area, Maybe other businesses are offering the
same service or goods for a better price and quality then him.
The second reason that contributes to business failing is the owner
having little or no knowledge of accounting which is the heart of every
business. Not knowing about accounting means that his financial
statement, which would mean that they are either undervalued or
overvalued which contributes to making wrong business decisions and
that would later contribute to the business failing. Also if the owner
wants to invest in stocks, bonds or another business and he does not
know how to read financial statements it will cause him to invest in the
wrong types of stocks, bonds or business and he will end up losing
money and go bankrupt.
The third reason I said was that the owner does not have a proper
business plan. If you do not have a proper business plan then your
business will most definitely fail because your business plan is like
your road map if you do not have a proper road map you will never
get to your destination. A business plan is basically how you want your
business to start out the goals you want to reach and what you want
your end game to be. A business plan shows that are you reaching
your goals if yes by how much if not by how little it helps direct what
you want to do.
The fourth point I said was that the owner does not have proper
financing before and during the business. That will lead to him not
having enough money to fund projects, services or merchandise, and if
he does have funding for it maybe he won’t have enough financing for
the office expense, electricity bills, telephone bills or rent. Not having
3. those money for those will cause the owner to keep on taking loans
and he will keep going into debt which will end up with him going
bankrupt.
The fifth reason I said was that the owner is not a risk taker. As an
entrepreneur you must be a risk taker to make your business expand,
to get the best contract or deal. If the owner does not take certain
risks it will leave an opportunity for other competitors thus making
them better at the service or goods that the person is providing and he
will end up losing consumers and go bankrupt. "There are very few
self-made millionaires, if any, who have not taken risks which would
make the rest of us unable to sleep at night, or keep our food down."
Dominic Lawson (1956–), British journalist Source: Independent
(London) (December 16, 2008)
The last reason I said that the owner does not have a proper exit
strategy. Now in the future you will finally plan for retirement and
want to cash out on your returns there are a few ways to do that such
as liquidating your business by selling all your assets and closing the
door, the second way is to sell your business to another party who is
interested in buying it, the third is to make a next of heir take over
and the last is to sell stocks of your business.
In conclusion to my essay the reasons why I believe small business fail
and as I have also elaborated on are because of the owner not doing
proper research, the owner having little or no knowledge of
accounting, the owner owner does not have a proper business plan,
the owner does not have proper financing, the owner is not a risk
taker and lastly the owner does not have a proper exist strategy and
that is my conclusion to my essay on why small businesses fail. I’d like
to leave you with this qoute “I’m convinced that about half of what
separates the successful entrepreneurs from the non-successful ones
is pure perseverance.” Jobs , Steve. "Quotes for small business
owners." www.smallbiztrends.com. Small Business Trends LLC.. Web.
11 Feb 2013.
