Small Business & Entrepreneurship Institute, Inc.

Success in business is never automatic. It isn't strictly based on luck - although a little never hurts. It depends primarily on the owner's foresight and organization. Even then, of course, there are no guarantees.

Through our professional expertise and many years of working with start-ups and small businesses, we have listed 5 main reasons small businesses fail and they are listed in the order of occurrence.

Fail to Plan - If you are leaving to Toledo, OH on a road trip, I would hope that you get directions and find out what are the requirements for your trip. Distance, miles to get there; Equipment, is your vehicle ready for the trip; Human Capital, is the driver ready to endure the trip and so forth Without planning, one cannot start. Common planning tools in business are: Business Plan, Financial Projections, Strategy Plan, Marketing Plan and other related Planning tools that will be further discussed. Therefore, if you are planning your journey then make sure you have a plan, so that you know when you get there, or at least you know where you are going.

Lack of Experience - In the construction business It is important for every craftsman do their trained skill. The Plumber to the plumbing; the gardener to the landscaping; conversely speaking if we are great financial gurus, then we must team-up with other talent that will assist us with our journey. These individuals, that you will entrust, will eventually become your "TEAM" of experts. Initially you may begin with hired help on a contractual basis, but eventually you must surround yourself with avid professionals such as a Banker, a CPA, an Attorney, a Financial Planner, a Consultant or a Coach and also don’t forget your personal trainer, your medical doctors.

Insufficient Capital - isn't true that when we need the money, we can't find it. One of the main reasons for running-out of money or as used in business, Capital, is that we don't plan. You will need to become familiar with various pieces of artwork for the business world. Your Financial Statements, they are comprised of 1) Your Income statement, 2) your Balance Sheet 3) Statements of Cash Flow and your Budget and Forecasts.

Sales/Business Development - After you have set your self up in business, you have the perfect team, you will need to package your business and hit the road to preach about why you are different. the only one that will be able to do it effectively, it will be YOU. No one else believes in the business concept as you. therefore, don't be scared, its not selling, its about building long term relationships and helping become more effective and successful. Develop your marketing plan early, create a sales budget and don't giveup.

Accounting & Financial Knowledge - This is a must, even if you cringe when you hear about numbers. To be financially successful you will need to know the basic reports described in the item above. Financial Statements should be the bare minimum an owner needs to understand. It is the health of your business. Other information will become cruicial to grow your business and become competitive including and not limited to Financial Ratios, A/R Reports, A/P, Cashflow Reports, production, capacity and many more.