Top Reasons Why Small Businesses Fail

Most American small businesses end in failure, despite the fact that many people dream of one day running a successful small business of their own. In fact, less than 5% of small businesses are still in action just 10 years down the road from their initial startup date. There are a number of reasons why small businesses fail, and by making yourself aware of these reasons you will be better able to avoid them yourself.

Poor location: If you have a small business, chances are you will probably have a storefront, and location will be important. Lots of people jump the gun on starting their small business because they are so excited and filled with anticipation. Too many people ignore the fact that once they choose a location, they are likely to remain in that location, and instead of waiting for the "right place" to open up, they take whatever is available. People also often settle into a poor location because they are saving money this way; but while they are saving money in the short term, they are losing money in the long term.

Saving money: "Saving money" on a location is not the only way small businesses try to save money early on. Lots of small businesses also cut corners in the way they present or even create their product, and this hurts them in the long run. If you want people to spend money on your product or service, you need to first spend money to make it good and appealing!

Name recognition: People are already familiar with the big brand names, and this is one reason why they continue to draw customers. Small businesses need to learn the importance of going out of their way to create name recognition, as consumers are far more likely to part with their money when it is going to a name they know. You can begin to stir up name recognition yourself by doing promotions, by advertising, and by creating an online presence; in fact, you can even combine all these elements together.

Your dream of running a small business that sticks around for a while is certainly attainable. But before this dream can become a reality, you need to make sure you understand the most common mistakes people make, and you need to know how to avoid them!

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