Why Some Small Businesses Fail Essay -- Economics Business Management

Why Some Small Businesses FailIt is hard to measure the size of a backing. According to TheDepartment of Trade and Industry (DTI), an SME can be described as abusiness that occupys between 0-49 people. However a company such as aChemical Plant may employ less than 49 people but piddle a turnover of20 million. So according to the number of employees, the DTI wouldclass it as a lowly business. However, according to the level ofturnover it could be classed as a large business. The size of the firmis generally measured by the amount employed1.The amount of SMEs is forever increasing. There are many reasons forthe increase, such as improved technology, ability to sub-contractpart of business and public sector being encouraged to amaze smaller.There is also Push and Pull agents that help people come to thedecision to be self-employed. Push factor outs let in people who areunemployed or made redundant decide to venture on their own. This maybe simply starting their own window cleanin g service. Another pushfactor is the Pratt factor this is when an employee finds himselfworking for someone else less talented and wonders why am I workingfor you? so decides to start up on his own.The amount of SMEs is forever increasing. There are many reasons forthe increase, such as improved technology, ability to sub-contractpart of business and public sector being encouraged to manufacture smaller.There is also Push and Pull factors that help people come to thedecision to be self-employed. Push factors include people who areunemployed or made redundant decide to venture on their own. This maybe simply starting their own window cleaning service. Another pushfactor is the Pratt factor this is when an employee finds himselfworking for someone else less talented and wonders why am I workingfor you? so decides to start up on his own.Pull factors include peoples increasing desires to exploit anopportunity, turning their hobby into a business, the motivation towork independently and when people become older they sometimes inheritmoney they sometimes put this money into a business venture theyperhaps previously couldnt afford.The failure rate for small businesses is very high. The probabilitythat your new business go away make it past the third year is less than25%. In other words, over three-... ...elves in a whole too copious to digthemselves out of. It was now too late for them to ask for advice andthe shop closed down. My advice to my friend was to learn by hismistakes and try again.It is inevitable that small businesses will carry on failing.Sometimes the reason behind the failure cant be helped. However fromreading this essay you should gather that the majority of the times,failure could have been prevented. In fact 82% of the time whenbusinesses fail, the owners really could have done somethingdifferently to stop it from happening.REFERENCES1 Business Studies by Dave Hall, Rob Jones, Carlo Raffo. Edited by Ian Chambers.(1996)2 www.compulink.co.uk3 ww w.bcentral.com4 The Business Environment (second edition) by Ian Worthington and Chris Britton. Published 1997 by pitman publishingsJOURNALS USED Journal of Small Business and Enterprise Development, Vol 9, homecoming1.Learning the hard way the lessons of owner-managers who have closedtheir businesses. By David Stokes and Robert Blackburn. Journal of Management Development, Vol 13, Issue 7. ManagerialCompetences in Small Firms. By Graham Martin and Harry Staines.