Five reasons why small business firms are failing

December 11, 2023 45

Launching a small business in the U.S. in 2023 has been a tough venture for many aspiring entrepreneurs. Although there have been a number of successes, there have also been a significant amount of failures, but why?

According to recent research over 90% of small businesses that launched in the past year in America have now had to close their doors or failed to keep running for a number of reasons. Is customer experience their downfall or are they unprepared when it comes to research? Below are the five main things that caused US businesses to fail this year.

Lack of marketing knowledge

Marketing is king when it comes to launching a small business, so it’s time to get savvy on how advertising really works. Unfortunately, a number of small business owners don’t inform themselves on the importance of marketing and have no idea how to spread the word about their brand.

Shockingly, many new business owners don’t even know how crucial SEO is, especially when you’re just starting out. Take a course, read a book, and get generally clued up on all things marketing as it’s the gold dust that can lead to huge success.

Not enough business expertise in the field

Throwing spaghetti at the wall and hoping it sticks, just isn’t going to work when you’re trying to run a lucrative business. You may think you’re an expert in a certain field, but it takes a lot to really know what you’re doing and dominate a market.

Running out of business capital

Cash flow isn’t easy when you’re trying to run a new, small business so many companies simply run out of cash and are forced to close down. Running out of money is probably the most common reason, because entrepreneurs aren’t clued up on their finances. Getting your cash flow just right when you’re creating a start-up is a huge factor and should never be underestimated.

Poor leadership

If your business scales quickly and hires employees right off the bat, it’s important to have a good base level of leadership in place. Businesses can literally crumble at the first hurdle when it comes to poor management and leadership, so it’s never too early to look into training.

Ineffective research

There are a record number of failing businesses due to ineffective research, especially in the launch stages. Market research can make or break a company, so it’s important to put plenty of time and effort into this area of a business launch. Cutting corners and hoping something will work out, will ultimately lead to a poor business plan that has no longevity.

Hopefully, these five areas will provide lessons to small business owners hoping to launch or maintain their company over the coming months or years. Whether you’re honing in on your marketing strategies or making sure you’ve got enough money in the bank, there are a number of useful steps you can take now to ensure your small business is a success.