Why Small Businesses Fail – And What To Do About Yours

I teach marketing on a course for people who aspire to start their own small business. Invariably I begin with one of those frightening statistics about how many small businesses will fail in their first year of operation, and how many of those who do survive the initial struggles will still be around five years later.

Depending of the source of the statistics, up to 95% of small businesses crash to the ground before they’ve been airborne for long.

I usually ask my students to help me brainstorm a list of reasons that might cause small businesses to get into difficulties. Below are some typical answers.

  • lack of knowledge
  • bad management
  • poor location
  • not enough funds
  • no budget
  • inconsistent cash flow
  • not enough staff
  • deficient planning
  • inferior service
  • substandard product or service
  • shoddy marketing
  • flawed expectations
  • low sales
  • unresponsive to market changes
  • talented competition

Then, as we look down the list, I ask my students to tell me how many of these reasons for business failure are in any way connected to marketing.

Answer: All of them.

It’s simple really. If you’re a small business, you’d better get your marketing in shape if you plan to be around to confound the statistics.

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