Why do so many small business fail?

December 02, 2007

Posted by WealthMentor

( 0 ratings )

1. They fall in love with a product or idea instead of finding a need and then filling that need. I may LOVE selling mortgages. But if I try to open a mortgage company right now just because I am good at it...well that is like business suicide in this market. But if I see that there is a need for "Pre Foreclosure Counseling" then I may be able to fill a hole in the market and create a sustainable business.

2. They seek to compete on price instead of leading with value. Many new business owners build their models to be competitive on price with little or no attention on the overall value of their offering. A value driven business model with higher prices will dominate a price driven model every time. Some would say "what about Wal-Mart"? Well, they offer both lower prices and tremendous value. One stop shopping, groceries, huge selection, open all hours, etc..that is value.

3. Lack of start up capital. Many over project their initial earnings. They assume that they will get things up and running and profitable much faster than is possible. I would say, from what I know of small business start ups, this is the leading cause of failure.

I know that there are many more valid reasons that a small business would fail, but these are the three that come to mind as the top 3.

Danny Arrington

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April 12, 2008

Posted by Moneyvelocity

( 0 ratings )

I don't think small businesses fail. I think small visions fail. If the vision for your business doesn't reach beyond a "mom and pop", then the end gets closer every day you open up shop. Walmart started with a small shop but had a big vision. Apple started in a small garage, but with a big goal. Bill gates took a small piece of code and added a big plan.

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