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In a fast-paced, ever-changing business world, call on University of Missouri Extension to ensure that your business remains competitive and prosperous, and to create more wealth for you and your community.

WHY DO SMALL BUSINESSES FAIL?


Results of an SBA study
Eighty percent of all new small businesses fail in their first five years. Here are the major reasons they are ranked according to how frequently they were cited:

  1. Inadequate front-end planning.
    (a) No business plan prepared; (b) no feasibility study; (c) no cash flow projections.
  2. Insufficient capital for startup and backup.
    Even the most dedicated workaholic cannot overcome ongoing capital deficiencies due to startup losses.
  3. Inexperienced management.
    Insufficient experience in the management and in the day-to-day operations of the business or of any business.
  4. The wrong location.
    Low traffic, no expansion area, changing characteristics of the neighborhood. The customers are out here, but unwillingness to live in the community.
  5. Inventory mismanagement.
    Too much of the wrong inventory, be it food, clothing, equipment, nuts and bolts, etc.
  6. To much capital in fixed assets.
    The failure to properly anticipate the cost of equipment and real estate needed to start and expand.
  7. Poor credit practices.
    Failure to properly extend and control credit policy and practices.
  8. Unplanned expansion.
    If on location is doing well, a second doesn't mean the business will do twice as well unless management is available.
  9. Having the wrong attitude.
    Not ready to work longer and harder than ever before: too much money in trappings and appearances.
  10. Inadequate records and financial knowledge.
  11. Unwillingness to employ and work with a banker, an accountant, and a lawyer.  These are three essential partners to have and use.
  12. Lack of managerial foresight.

Failing to build staff to compensate for the weaknesses of the founder or owner: failing to adequately compensate second-line management.

One solution to these problems is education. For a wide-range of business training, including individual counseling and programs for groups of business people, contact University of Missouri Extension at  636-583-5141.

 

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