3 Solid Reasons Why Small Businesses Fail

3 Solid Reasons Why Small Businesses Fail

According to the recent research about small businesses, it has been revealed that very few of them are able to sustain their growth and progress for the first five years and that most of them fail even to survive. According to the statistics of some researches, only 50% are able to manage their progress in the first ten years while the remaining 50% completely wipe out from the scene. Also, many other studies show that only 65% of the small businesses are able to make their mark in the market. This means that out of 10 small businesses, eight fail to reach a sustainable level f their growth within the period of the first 18 months.

In this article, we are going to share with you the reasons behind this small ratio of a small businesses’ success. If you are going to start a small business, these points will be useful for you to make sure that you do not repeat these mistakes to meet the same destiny as most of the small businesses have.

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1. Leadership Failure

The base of every small business is its management team. If it fails to deliver the right performance, it quickly leads the small business towards failure. The reason why the management team fails to deliver is when the team hired for this work is inexperienced. They do not have enough expertise to deal with situations, they cannot make rational decisions, and they do not have a clear vision of what to do in a certain situation. Moreover, there is a miscommunication between the management that lead to a contradiction in viewpoints. As a result of all these things combined, the business slips into the ditch of failure.


To resolve this problem, try to learn about the core problem. Also, motivate your team by enhancing your own leadership skills. Only then you can get out of this crisis and save your small business.

2. Lack of Uniqueness and Value

There are many cases of small business failure even when the management system of the business is working well and the products or services the business is providing are great. At this point, many small business owners wonder why they are failing? The answer to this question is that they have lack of uniqueness in their products and services and also, they have not added any additional value to their product as compared to their competitors in the market who have already established businesses.


As customers like to go to the product or service from the company which they know from years and have developed credibility for that company. In such a scenario, when your small business will come up with a similar product, without any change or value addition, then no one will be attracted to you. So, what you can do is to make it a little unique than others and add value to your product. In this way, people will find your offer better as compared to others.

3. Lack of Customer Demand Consideration

The biggest flaw in a small business is that they fail to develop and maintain a good relationship with their customers. Either it is not their priority in business, or they fail to do it in the right way. This business when ignoring the demand of their customers and then fail to provide what they want, they lose even those customers who wanted to buy from them.


The customers of your small business love to buy from you because you are providing them good standard products and services at lower rates as compared to the huge business in the market. But this is not enough. You have to consider the demands of your customers and bring these features to your products and services. Your customer must know that you will note down their demand and will offer them the same thing in the future. In this way, they develop a bond and connection with you which will help your business grow and prosper.

These are the simple points that become the reason for small business failure. Most of the times the small business owners ignore or overlook these points and get their business into trouble from which recovery chances are very bleak. Just read these points thoroughly, do a little more research on the internet, visit a successful small business owner and learn about other tactics as well. You will see in the future that how fruitful these efforts are.

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