Many of the small businesses have a very low survival rates. According to the Small Business Administration (SBA), seven out of ten (two-thirds) new employer firms last at least 2 years, and almots half of them survive 5 years. Small businesses make some fatal errors which directly impact their survival. Some of the mistakes they make are:
- Many companies spend high expenditures for expansion of company. And after expansion, they will face economic problems as many small businesses companies do not have effiecent financial plan.
- Some small businesses without a proper plan succumb to uncontrollable expenditures like increase in energy-rate, materials, labor and also due to natural disasters. They should make sure that they protect their investment and keep enough reserve cash to carry you through market downtrends and seasonal slowness.
- Any business plan is a map for success. Small bussiness management does not consider upcoming challenges and problems in bussiness.
- Some businesses may fail due to bad business location they choose either due to lack of experience or lack of funds to set up in a good commercial location.
- Small businesses generally fail to change with the time. They will not be aware of the latest technolgies and trends. Even if they are aware of them, they don’t implement in their business, they rather choose to go in traditional way.
- Small businesses generally underestimate the competition. Every small business has to compete with other local competitors along with the larger companies.