Why some home Businesses Fail?

I have owned different small home businesses over the years. Some have done better than others but none of them have turned into a large business. But they can be fun as you start them up and work on building them up. For me it is anyway. But depending on your financial situation and stage of life you are in can determine how conservative or big you decide to go.

Success in business is never automatic. It is also not purely based on luck; it depends primarily on the owner’s foresight and organization. And even then, of course, no guarantees of any kind! There are a lot of small businesses you can do that take very little investment of capital, just your time. For instance a blog you can start at a pretty low cost. You can write a e-book at a low cost. You can start a E-Bay or Amazon business at a low cost.

Starting a small business or a home business always involves risk, and the odds of success are very low; that is why when people say think before you invest all your saving in one bank, they actually mean it because putting all your eggs in one basket can be extremely risky, one wrong step and you are back to zero. According to the Small Business Administration, over 50 percent of small businesses fail in the first year and 96 percent over the first five. Michael Ames, in his book micro Administration (Small Business Management), argues that the reasons for the failure of small businesses are:

– Lack of experience
– Lack of capital
– Bad location
– Mishandling of inventory
– Excessive investment in fixed assets
– Bad credit agreements
– Personal use of the economic resources of the company
– Growth unforeseen

Meanwhile, Gustave Berle in your business Make Yourself (The Do It Yourself Business Book) adds two more reasons:

– Competition
– Low sales

It is true that there are many reasons not to create your own business. However, for the right person, the advantages of owning a business far outweigh the risks that this entails:

– You are your own boss.
– Your effort and your work hours will benefit you directly, rather than increase the gains of others.
– The earning potential and economic growth is much higher.
– Launch a new business is exciting, in part, because it involves some risk experience.
– The management of a business is a source of endless challenges and learning opportunities.

So, are you ready to take that challenge? It all depends on your financial situation and should check with your accountant and financial planner for any advice. Everyone has different situations. For me being semi-retired I am pretty conservative on how much money I would invest in it and I am not going to take on any debt at my stage of our lives.

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