smallbusiness.co.uk: Helping your business think big

According to Barclays Small Business Survey, there were 288,200 mainstream business start-ups in the first half of 2004, an increase of 23 per cent compared to the same period last year. There were 164,400 mainstream business closures in the same time period. Therefore there was a 57 per cent success rate for the first half of 2004.

There are no clear-cut statistics showing why businesses succeed or fail, although there are a number of reasons that could cause a business to fail such as:

Poor marketing: Successful businesses are ones that understand and meet the requirements of their customers.

Cash flow problems: Many businesses struggle through poor cash flow management.

Poor business planning: A business plan should cover aspects such as marketing, finance, sales and promotional plans, as well as detailed breakdowns of costs and profit predictions.

Lack of finance: Insufficient finance often means that businesses are unable to take opportunities available to them, or have to compromise - going for high cost solutions to problems, rather than lower cost ones that would yield greater competitive advantage.

Failure to embrace new technologies and new developments: In a fast changing world leading businesses are ones that make best use of advanced modern technologies in an appropriate way.

Poor choice of location: Location is a very important business decision. A good location is one that appeals to large numbers of customers, while at the same time minimising costs.

Poor management: Weak and inexperienced management is one of the major causes of business failure. Managers have to work extremely hard and understand their customers’ needs.

Poor human resource relations: Successful businesses motivate their employees to work hard to help the business succeed.

Lack of clear objectives: Successful organisations have clearly focused and communicated objectives that enable everyone in the organisation to pull in the same direction.

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