Many of us jump to start a new business for wrong reasons and without any knowledge of how to develop and successfully operate a business. That’s why many businesses fail within first few years or months of opening their doors. Within four to six years of starting a business approximately 50 to 60 percent of small businesses fail. That’s why understanding of some business basics is important for the survival and success of a business. With limited resources many small business owners suffer from lack of understanding to stay and grow their business.
Understanding why a small business fail can help. Most small businesses do not have enough capital beyond the starting point to carry on a business. Another reason why a business fails immediately after opening doors is lack of advertising and exposure. You expect the new business to generate enough cash flow but if the business is not making money, it fails suddenly. Cash flow and budgeting are two most important factors for survival of a small business and the owner should have a good knowledge of these concepts. Lack of reliable and trained employees has been also identified by many as a reason for their business failure.