There are a variety of reasons whey small businesses fail. After working with hundreds of small business through the years here are a few that RISE TO THE TOP.
NO MARKETING PLAN
NO MARKETING CAMPAIGNS
NOT TESTING MARKETING EFFORTS
NOT MEASURING MARKETING EFFORTS
Too many business owners look at marketing as an EXPENSE when it's actually one of the best INVESTMENTS you can make for your business!
You can't open the doors of your business and expect customers to find you. I have seen businesses spend tens of thousands of dollars on a new retail location and/or to build a new shinny website and then EXPECT customers to find them. You can have the best website in the world but if no one knows about it or can't find it how will increase sales?
ATTENTION ALL BUSINESS OWNERS!
Marketing is ONLY a Expense if you are doing it incorrectly! Maintain active marketing campaigns and make sure you can MEASURE all of your marketing efforts. Don't just throw money at your marketing and think its going to work itself out. Test your marketing and advertising and measure everything. Large corporations can afford to throw money at marketing they can't measure but most small businesses can't afford this.
Successful businesses only risk a small amount in testing an idea with a high potential return .... e.g. adwords to get traffic to a squeeze page or survey .... then only do they create the product if the test indicates it is profitable else they fail quickly. They only take major risks like renting a shop or hiring staff when they have a proven idea that is cashflowing well. Successful businesses plough 10% of turnover into building the business and another 10% into personal & professional development of manager & staff.
Most startups fail in year 1 by developing a product before discovering there is a market for it .... and taking large risks like opening a store for low returns (physical goods have a margin of 10-20%) or risking their home for a loan.
Year 2 taxation is the biggest killer of startups because employees are used to spending all their income once they have it. But when switching to a business taxes are not due till the end of the year. Forgetting to pay themselves first (instead of last) compounds the issue.
Year 3 loss of focus causes problems because too many business owners use a business plan as just a tool to get money from friends, family & fools instead of as a working guide.
Year 4 + the biggest traps include failure to do what only you can do & delegate the rest resulting in burnout.
Business owners are outsiders in society because they have not accepted the social conditioning of working hard for others for 40+ years in the hope of getting a pension of less than half of what was not enough to support your life while working. So they need a support network from successful business people.
A business plan is needed based on the owner's requirement for funding his desired lifestyle *10 ... to give the minimum target profit level of the business.
The successful people/businesses have different accounts and budgets for asset building 10%, education 10%, contribution 10%, play10%, long term saving (eg for new car) 5%, savings/debt reduction 5%, necessities 50%. In other words, budget all your expenses, needs, and desires and stick to it.
Above is not a "Does It All" recipe for business success but should at least give you a few tasty dishes to sic your teeth into.