Helpful Tips: Why businesses can fail

It's estimated that 20% of all small businesses fail in their first year and ultimately as many as 90% fail over time. So, this is a phenomenon to investigate as viable opportunities most often incur risk.

Successful companies find a way to overcome problems while others simply close the doors. Einstein wrote "In the middle of difficulty lies opportunity."

The business owner must deal with problems and stress that may surface as they navigate the business swamp.

Whether the challenge is internal or external, it is normal to react emotionally to bad news about your market, customers or staff. Typically, one experiences regret, doubt, blame, fear, shame and escape. It is important to understand and acknowledge these emotions, without acting on them. Rather than dwelling on depression, shame or fear, one should take action or seek help. Some help is on the shelves in the Stephen Poorman Entrepreneurship, Business, Finance and Banking section on the first floor of The Ross Library.

There may be many reasons for business problems including a lack of planning, lack of capital, ego, emotion, lack of training, absence of professional support, wrong markets, disregard for customers, over-confidence in friends, bad partnerships, ignorance of the law and a host of other conditions that may generate inadequate sales, heavy operating expenses, slow inventory turnover, a poor location, ineffective marketing and competitive weakness.

The seasoned business owner will recognize early warning signs of trouble and categorize them as early, mid-term or late in their cycle. And the trouble must be faced head-on and resolved before it mounts. The business owner must "plug their canoe before it sinks."

You will find more information regarding "Why Businesses Can Fail" in, "Navigating the Business Swamp," available on amazon.com or by subscribing to The Express, All Access at subscriptions@lockhaven.com.

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Stephen Poorman is an author-entrepreneur and consultant who is certified emeritus by the Institute of Management Consultants.