2.1 Lack of preparation
Not fully understanding what they are letting themselves in for
Underestimating the time and commitment required and the responsibilities of owning a small business is a recipe for failure and opens up pitfalls along the way. This suggests that there was a lack of research done before setting up the business.
Starting a business for the wrong reasons
In Section 1 we talked about the things that can be gained from running your own business; independence, time with the family, reward for your effort. These are true, but these are considerations when running a business, not the main reason. The combination of a good business idea, the suitable market and the skills to run the business should be the reasons.
Choosing the wrong business partner(s) to help grow the business
When working with others there is a potential for partners to have different agendas and objectives. Dishonesty is a risk between partners, but even totally honest partners can have unrecognised differences or expectations that could lead to problems.
Insufficient capital
Underestimating how much money is needed to start up or last till the first invoices are paid can be fatal for a new business.
Lack of planning
Significant and thorough planning is essential. The business planning process helps to identify where the peaks and troughs will be and what investment is required and when.
2 Why do small businesses fail?