Why Do Small Businesses Fail Analysing the Reasons for their High Rate of Failure in the UK

Undergraduate
Essay
Miscellaneous
Pages 9 (2259 words)
Download 0
The journey of innovation - be it of product or service - is long-drawn and requires perseverance. Very few take the courage to think through their ideas and give it the shape of a business. For the business to succeed, however, even good ideas need good backing - of finance, of marketing and much more.

Introduction

Studies show that by the third year of starting up, at least half of them close down. While there are external factors such as inadequate funding that leads to this, part of the reason is also internal - such as the work culture, the marketing being poor, the location not being right, the product being ahead or behind its times, and so on. Therefore, for an entrepreneur to succeed, it is essential that they come with not only a product/service plan but also its business plan and a back up in case the first one does not work.
In the first place, there is a lot of concern that not many innovative ideas find the light of the day in the UK. According to a study commissioned by NESTA, an early stage investor in innovative and creative businesses, 80% of innovative ideas do not see the light of the day as knowledge of how to go about it, lack of funds and lack of time. However, the biggest concern was the fear of failure - what if the venture failed
According to a Cambridge University's Centre for Business Research study (Fielding2, 2006) based on three surveys of more than 1,000 SMEs conducted in 1991, 1997 and 2004, SME survival rates fell from 59% to 54% over the same period. Between 1991 and 1997, 28% of the companies in the survey failed; between 1997 and 2004, that proportion rose to 32%.
Among its more worrying findings, the research reveals a significant decline since 1997 in the proportion of SMEs c ...
Download paper
Not exactly what you need?

Related papers

What characteristics define small businesses?
Aside from this, small businesses also have balance sheet total or asset component of not more than 2.8 million and employment size of less than 50 employees (Small and Medium Sized Enterprises 2004). …
Analysing operational risk failure of Barings bank
At the heart of the devastating scam was a person with a huge appetite for risk-taking but hardly any accountability towards the bank, Nick Leeson. Overnight, the unscrupulous futures' trader from London who was previously the poster boy for Barings' high-growth earnings from Singapore's premium monetary exchange, SIMEX (In 1993, he documented nearly 10% of the bank's profits in futures' trading),…
Why Do Small Businesses Fail Analysing the Reasons for their High Rate of Failure in the UK
Studies show that by the third year of starting up, at least half of them close down. While there are external factors such as inadequate funding that leads to this, part of the reason is also internal - such as the work culture, the marketing being poor, the location not being right, the product being ahead or behind its times, and so on. Therefore, for an entrepreneur to succeed, it is essential…
UK Crime Rate Indicators
The current paper will look into these issues and finally draw conclusions with certain issues that should be incorporated to improve their quality and acceptance.…
Common sources of success or failure of startup firms
While it is important for the economy to have influx of new, innovative, and entrepreneurial companies the actual success rate of new companies is dismally poor. In fact, 90% of all new companies launched in the UK will fail within the first two years (ibid). There are proven strategies and models available which can help increase success and growth rates, and one such strategy consists of…
Reasons that Relationships Fail
Any union that does not propagate trust as its core value is definitely standing on a shaky foundation. A successful and happy relationship should be predicated on trust, otherwise the union will be punctuated by countless second-guessing, incessant arguing, and an overall unhealthy vibe. Distrust is fueled by insecurity and immaturity, hence one should be hesitant in plunging into a committed…
High Suicide Rate in Japan
As explained in an Economist article entitled “Elusive but Not Always Unstoppable,” suicide, or self-killing, has been traditionally viewed as the honourable response to dishonour or failure in Japan. Today, however, there seems to be numerous other causes for suicide and, as a result, suicide rates have increased remarkably over the past ten years. Indeed, today Japan has the highest suicide…