Small business failure is usually related to running out of money. Most new business starts take many months, if not years, to show a profit. Unfortunately, many enthusiastic newcomers to the business world are overly optimistic about their cash flow and profitability. Their failure to have adequate funding is usually the crisis that causes the doors to close, perhaps prematurely.

Plan For the Worst Case Scenario...

In the early planning stages for any new business, all entrepreneurs have great optimism for their new business. It is important to plan for the worst of times when starting any new venture. Without strong funding in place, it may be madness to proceed. Money is the fuel that runs the engine of business, without exception. If the money runs out, the business is dead.

Lack of Market Studies...

Even with adequate funding in place, some small businesses are destined to fail because there is not a viable niche in the marketplace for a profitable business. Market studies will help one determine if there is a customer base available for the products or services that one plans to sell. Even a great business plan is destined to fail if it is not located within a viable market. Blind optimism may not see potential pitfalls that market studies may reveal.

Harder Than It Looks...

Some businesses fall victim to the amount of work and dedication that new businesses may require for success. The old adage that the boss is the first to arrive, and the last to leave the office is essentially true. Because making a business successful is usually harder than it looks, many new businesses fail. Not everyone has the dedication and drive needed to survive the first years of struggling and sacrificing required to find success.

Bad Luck...

It may seem trite to blame business failure on bad luck, but this can be the reason that some business start ups don't survive. Economic downturns are not always predictable, and many new business endeavors suffer failure when the unexpected occurs. All small businesses that started just before the 9/11 tragedy were victims of the terrorist attack in the sense that the US economy was literally turned upside down in one day. It would have been impossible to anticipate such an event with any amount of planning.

The Odds...

The odds of business success or failure is probably around fifty percent for the average new business. Even with great planning and adequate funding, there is still a predictable rate of business failure. Those who succeed are usually those who carefully studied and planned their ventures. Blind luck is not usually the formula for success, and those who plan carefully are usually the ones who defy the odds and succeed.

If there is a secret to enjoying success instead of suffering failure, it might be found by using every possible tool available in the early stages of planning a new business. Bankers and accountants can advise in areas of money and finance, while lawyers can assist in legal liabilities that should not be ignored. Marketing professionals can help with appropriate market studies, and one's own family should be included in discussions relating to the effects that owning a business may have on family life.

At the end of the day, success is always a possibility with a new business start up. Despite the obstacles, the dedicated small business entrepreneur wins more often than not. That is the beauty of capitalism, and the reason that small businesses begin every day. The spirit of the small business person should never be doubted.

Learn more about this author, Bob Schmidt.
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