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The following article was published in our article directory on May 11, 2012.
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A Small Business that May Fail

Article Category: Business

Author Name: chickie maxwell

There are some reliable sources that say a small business usually closes shop within the first five years. This is because of the kind of business initiated. There is a great chance of such a venture to succeed but there are also the types to stay away from as they are most likely to close .

One of the businesses that have the tendency to close is an independent restaurant. Their failure rate is bigger than the average which is estimated at 60% within half a decade. There are various reasons for this such as the owner's experience and skill, capital and other factors in business. Aside from this, such a business encounters various problems on inventory, control, number of employees needed and market penetration when it comes to a new menu.

Another small business that is risky is direct sales. The success of the business will rely on the owner's strategies, energy and skills in selling and start-up capital. Those who engage in this are promised fast and simple outcome and people who do not want to put up much effort in running a business are attracted to this. A direct-selling company sometimes does not offer support and requisite training for their downlines to succeed. The business dies down when the downlines stop.

Another business most likely to fail is a retail store selling shoes, apparel groceries and other goods as there is just so much energetic competition from brand stores. Putting up retail shops also include high overhead expenses such as lease or rent in prime locations and capital for inventory supplies and demands of customers. Before the store makes a cent, it has to have plenty of display to attract customers.

Another small business that may not succeed is one that offers consultancy or business coaching, human resource and the like. There are many people who claim to be consultants or coaches and because there is no obstacle in becoming a consultant, even those with no experience in business can say they are consultants. In addition, there is no required license for consultants and coaches. Because of this, clients are wary of them as they are aware that many of these consultants are professionals with no preparation in consultancy at all.

There are many causes why a business fails. One of them is putting it up for the wrong reasons instead of the right ones. The right reasons include love, passion, patience and determination for the business. Another cause is neglect and poor management.

The business also closes when there is not enough capital, when the location is bad and when there is lack of planning. Businesses also fail when they over-expand even when there is still no need to do so because this incurs additional expenses. Finally, businesses fail when they have no website because this is the most cost-efficient way to promote a business from anywhere in the world. Almost everyone now shops on the internet.

When one wants to open up a small business, these are the things he should stay away from.

Keywords: small business

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