Causes of failure of Small Business

Causes of failure of Small Business

A business which is independently owned and operated and not in its field is called small business. A small business is one with few Manufacturing than 500 employees. A business which is usually organized and managed by the owner and or his family members. Management is generally defined as the position and organization of multiple activities in an organization.

According to Forbes, more than 500,000 businesses are started each month — many for the wrong reason. Starting a business without sufficient operating capital is almost certainly a death-knell. Lack of proper planning is another common reason small companies fail and go out of business. There are some problems with developing a small business. These are as follows:

  • Limited capital;
  • Inefficient management;
  • Limitation in expansion;
  • Unlimited liability;
  • Lack of experience;
  • Lack of training;
  • More competition;
  • A scarcity of raw materials;
  • Lack of proper plan;
  • Lack of proper co-ordinations;
  • Lack of proper marketing policy;
  • Lack of separate entity;
  • A problem of receiving a loan;
  • Unexpected dissolution.

So, these are the various problems of developing a small business.