Factors which causes small businesses to fail and possible solutions on how to reduce failure. This research was conducted in order to understand fully why Huntley’s Farm failed. INTRODUCTION
Business dictionary.com defines small business as Designation for firms of a certain size which falls below certain criteria (that varies from country to country) in terms of annual turnover, number of employees, total value of assets, etc. Starting a business is an inherently risky undertaking. One can minimize the risks - and their potential financial losses - by starting small and planning carefully. Although starting small and planning carefully does not guarantee success of a business, its absence usually assures problems. In this research you will see the different factors that cause small businesses to fail and hat possible solutions that could counter these factors. You will discover new methods by which a business can become successful. According to the Small Business Association of Jamaica, a small business is regarded as one with an annual turnover of between US$100,000 and US$5,000,000 and a staff of 1 – 50 employees.
PURPOSE OF THE STUDY
The purpose of this study is to identify and discuss factors that cause a particular small business to fail. The goal of this research is to also give recommendations to this business that will make it a success in the near future.
1.Why did you start this business?
2.Did you do a thorough research of the location and the market before venturing into this business? 3.Is the plan for your business a long-term or short-term plan? 4.Have you ever thought about producing more than one product?
THE THEORETICAL FRAMEWORK
THE REVIEW OF LITERATURE
According to the Small Business Association of Jamaica, a small business is regarded as one with an annual turnover of between US$100,000 and US$5,000,000 and a staff of 1 – 50 employees.These businesses are normally privately owned. According to Karyn Greenstreet (2004) the latest statistics from the Small Business Administration (SBA) show that two-third of new businesses survived at least two years and forty four percent (44%) survived at least four (4) years. There are however key factors that if not avoided will be certain to weigh down a business and possibly sink it forever. FACTORS OF FAILURE
1.Mistaking a business for a hobby: Just because you love something doesn’t mean you should convert it into a business. Too often businesses fail because the owner feels their passion is shared by others. 2.Poor planning: Yes, you must have a business plan. It can be a simple three-page plan or a huge 40-page plan. The point is that you’ve looked at all the aspects of your business and are prepared to handle problems when they arise. 3.Entrepreneurial excitement: Entrepreneurs often get excited about new ideas, but are unable to determine if they’re “true opportunities” and/or put them into practice. 4.Putting all your eggs in one basket: Too often, small business owners will have just one product, one service or one big client. They cling tight to this one thing because it brings in good revenue. But what if the one thing disappears? 5.Poor record keeping and financial controls: Yes, you have to keep financial and business records, you have to review your revenue and expense report each month, and you have to file taxes and other business-related filings. 6.Lack of experience in running a business or in the industry you’re entering: There are so many hats you have to wear, from marketing and selling in order to run a business effectively. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. 7.Poor money management: You need to be able to live for one to two years without income when getting started; often businesses are very slow to get off the ground. 8.Wrong...