by Jerome Espinosa Baladad

Created on: October 29, 2010

Actually, many of the reasons why small businesses fail maybe right away shared by any small business owner you'll meet. They'll be more willing to share reasons, as long as you ask the right questions. And we've heard that small businesses fail at a rate of 80% within five years. Being a small business owner, you’ll be fortunate if you go past the period with another small business like yours in the same area of operations or industry. [Check the SBA site on the latest rate on failures

here]. The others will simply fail, fade away, or evolve into something else. Depending on studies you’ll get hold of regarding this observation on small businesses’ short life span, you’ll be, more or less, convinced that the rate of survival for small businesses is practically nil.

However, the biggest reason why a small business fails is due to the loss of interest from the business-owner himself / herself.  It’s as if the business has lost its steam of energy, just because the owner decided “it’s time to quit.” This “quitting time” is prompted by a variety of reasons, among which include what many believe and think is most logical: lack of funding (or capitalization). Though this funding problem may be obvious, it’s actually not always the root cause of the problem. There are other problems that crop up along the way, that challenge the owner/s and the small business. And thus making them decide to finally “give up.”

Of course, most small business owners may have done their share of planning before they ventured into business. If you’re the business owner, it’s difficult to admit to yourself that you didn’t do planning. For sure, plans have been made, but most of them were not formally written down (mostly because a business owner’s mind gets clouded amidst so many distracting concerns at the same time). You’re actually thinking against the majority, when you prepare and write down a business plan.

Probably, most details of the plan have been discussed openly with trusted friends, family members and allies. But the plan, usually, was not formally written down to help clarify issues out. If only the business owner could have been written down a plan prior to opening the business, the small business may have far better chances of survival. Writing down a business plan helps so much in clarifying a host of critical factors and issues for the survival of the business.

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