Statistics On Causes Of Small Business

failure

The latest statistics from the Small Business Administration (SBA) show that "two-thirds

of new businesses fail at least in the second year and 44 percent fail at least in the

fourth years."

Pie Chart Showing The Proportion Of Period Of Survival Of A New Established Business

From that statement, this clearly show that the

probability of failure of new established small business is

higher since there is 2/3 of the business is survive within 4

years

STATISTICS ON SEVERAL CAUSES OF SMALL BUSINESS BANKRUPTCY. [STUDY BY SBA]

• Firstly

• Secondly

STATISTICS ON SEVERAL CAUSES OF SMALL BUSINESS BANKRUPTCY. [STUDY BY SBA] –

CON’T

A common fatal mistake for many failed

businesses is having insufficient operating

funds. Business owners underestimate how

much money is needed and they are forced to close before they even

have had a fair chance to succeed

• Thirdly

STATISTICS ON SEVERAL CAUSES OF SMALL BUSINESS BANKRUPTCY. [STUDY BY SBA] –

CON’T

Inside business condition may means that poor management as one of the reason for failure.

New business owners frequently lack relevant

business and management expertise in areas such as

purchasing, selling, production, and hiring and managing

employees.

• Other causes are

STATISTICS ON SEVERAL CAUSES OF SMALL BUSINESS BANKRUPTCY. [STUDY BY SBA] –

CON’T

OVERALL GRAPH ON STATISTICS OF CAUSES OF

BANKRUPTCY

Here is data of start up failure rate. While these data look at the 1992 cohort of new single-establishment businesses, the failure rate percentages are almost identical for all the cohorts that researchers have looked at. So, these are pretty much the one through ten year survival

rates of new firms.

Proportion of New Businesses Founded in 1992 Still Alive By Year. These are the averages. There are considerable differences across industry sectors in

business failure rates

Case study: in USAGraph of U.S business failure per year

According to Dun & Bradstreet's data, the number of business failures in the United States rose from 71,931 in 1996 to 83,384 in 1987 (the latest year for which data is available). Failures hadn't been that high

since 1993 when the three-year losing streak associated with the 1991 recession finally waned. The 1997 rate is about 30% higher than the

decade leading up to the 1991 recession.

Graph of U.S business bankruptcy by year

The following chart presents the latest (February, 2003)

SBA statistics on bankruptcies in the US.

Note that they are lower than the overall failure rates. Many companies fade away without having to resort to

the courts.

IN CONCLUSION

Here are 5 smart strategies to avoid failure:1. Have a plan- Strategic plan to earn more profit2. Be the low-cost producer3. Have financial duck in a row-Excellent relationship with bankers4. Be flexible and fast-Think creatively5. Be a great problem-solver –Creative problem solving

Business failures are a fact of life, therefore it is necessary to manage business well and prepare for, what some people are saying is inevitable, an economic downturn

References:http://www.businessknowhow.com/Startup/business-failure.htm http://smallbiztrends.com/2008/04/startup-failure-rates.html

http://www.profitpro.us/avoiding.htmhttp://ezinearticles.com/?How-NOT-to-be-a-Small-Business-Failure-Statistic&id=163776

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