4 Reasons why a small business fails

4 Reasons why a small business fails

4 Reasons why a small business fails
4 Reasons why a small business fails

Starting a business is not easy, and there are countless statistics out there about the survival rate of startup companies. One scary statistic is that “50% of small businesses fail within their first five years”. 

While there are a lot of conditions that can result in a business failing, most times, small companies usually go out of business because they make one or more common mistakes. What are these reasons? Let’s discuss four reasons small businesses fail and some ways you can avoid business failure. These reasons were drawn from the experiences of other small businesses that have fallen in the past. Here are four reasons why small businesses fail and ways to avoid them. 


What you think sounds like a great business idea on paper may not be that great in reality. This doesn’t mean you shouldn’t plan, dream, or desire to have a successful business, what it means is never to start your business without having proper research or a valid business plan.

A business plan allows you to create unique value propositions that make you stand out from the competition. This starts by answering the obvious questions, How would your food business stand out from the restaurants in your area? What are you offering better than others? How do you gauge success in your business? 

A great business plan sets you apart from the competition you’re likely to face. 

Other questions to answer, include: What product do you have? How will customers find out about your business? What’s your startup capital? Are you going to add an online shop or an in-store is just fine? Answering these questions will help you boost your chances of success and avoid your business from failing. 


You cant do so much if you have so little. As a business owner, one reason your small business will fail is when you have no idea about your cash flow or haven’t counted the cost of what you would need to start your business. So most of the time, they either collapse just before they have a chance to succeed or they end up spending more money on their business than they planned.

It’s important to ascertain how much money will be needed in order to start your business. You will need to know the cost of starting your business and staying in business. 

To help small businesses manage their finances, business owners should first establish a realistic budget for company operations. It is important for business owners to have a variety of sources they can access capital, if they are ever in need. 


Do you remember the 5 Ws of marketing we were taught back in high school? What, where, when, why, and who. Exactly, this focuses on the where. Your location is critical to the success of your business. A bad location could spell disaster to even the best-managed businesses. 

Some factors to consider before picking your location include, the location of your customers. The traffic, accessibility, parking space, and lighting. How far are your competitors from your location, how safe is your location, and what’s the success rate of other businesses in that area? 

If your business doesn’t require people to come to your location but rather purchase your product online, you could start in your home or partner with brands that can help you reach more customers like ThankUCash. This saves you a lot of money and stress on location scouting or online promotion.


The world is becoming more of a global village where everything is online. If you have a business today, you need a website and a good social media presence to properly fit in.

A good website enables users to easily find out about their business and informs customers about their products and services. A good online presence can convert your visitors into customers. Your website should include your address, phone number, and hours of operation. It should be shared or distributed to blogs and other websites. 

Networking and referrals are guaranteed ways to help promote your business, you need a website so potential customers can research your business before they call you. You are likely to lose out if you don’t have a website. 

These days, most customers verify brands by their activeness on social media. You would look unprofessional without one and lose business to competitors who do at least have profiles on popular social media sites

Selling on your social media or website is a major benefit of having an online presence. You get to reach more people. You need a website that allows customers to know what you’re offering and the possible benefits your business offers them. 

For business owners who need help getting their products to their customers, or need more awareness on social media, ThankUCash is the best platform to partner with. Become a merchant and save your business from failing. Send a message to hello@thankUCash.com 

Let me know your thought in the comment section. ThankU 

Leave a Reply

Your email address will not be published. Required fields are marked *