Explain the reasons that a small business might fail and explain the factors/characteristics that contribute toward small business success.
http://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/
http://www.allbusiness.com/business-planning-structures/business-plans/1440-1.html#axzz2FvlosEt2
http://www.thehartford.com/successstudy/
http://www.powerhomebiz.com/starting-a-business/success-factors/10-rules-for-small-business-success.htm
Small businesses can fail for various reasons, including:
1. Poor financial management: Inadequate cash flow, over-investment, excessive debt, or lack of financial planning can quickly lead to the downfall of a small business.
2. Lack of market demand: Failure to identify and validate a target market's needs and preferences can result in offering products or services that do not sell well or cannot compete with existing players.
3. Ineffective marketing and sales strategies: Insufficient marketing efforts or ineffective sales techniques can prevent a small business from reaching and attracting customers.
4. Limited access to resources: Small businesses often struggle with limited access to capital, technology, skilled labor, and other resources required for growth and sustainability.
5. No differentiation or competitive advantage: A small business must offer unique value propositions or competitive advantages to stand out in the market. Failure to do so can result in being overshadowed by competitors.
On the other hand, several factors and characteristics contribute to small business success:
1. Market research and customer focus: Understanding the target market's needs, preferences, and buying behavior helps shape the business model and offerings, enabling the small business to effectively cater to customer demands.
2. Strong value proposition: Offering a unique value proposition, such as better quality, lower prices, exceptional customer service, or innovative solutions, can help a small business differentiate itself from competitors and attract customers.
3. Effective marketing and sales strategies: Implementing well-planned marketing and sales strategies helps small businesses reach their target audience, create brand awareness, and generate consistent and growing sales.
4. Financial management and planning: Proper financial management, including forecasting, budgeting, and cash flow management, ensures a small business has enough resources to operate and grow sustainably.
5. Adaptability and innovation: Being adaptable to changing market conditions and embracing innovation enables small businesses to remain competitive and seize new opportunities.
6. Strong leadership and a capable team: Effective leadership, combined with a talented and motivated team, contributes to small business success by making sound decisions, fostering a positive work culture, and executing strategies effectively.
To ensure small business success, it is important to assess these factors, continuously monitor the market and adapt accordingly, and seek guidance from mentors, industry experts, or business consultants whenever necessary.