Dr. Michael D. Ames, Professor of Management at California State University Fullerton and founder of University’s Small Business Institute, wrote a textbook twenty years ago that outlines some of the struggles that small business owners face when launching and managing their company. This textbook, “Small Business Management,” has been so influential that the Small Business Administration (SBA) cites it on their website.
The original list found on the SBA’s website consisted of 10 major reasons for small business failure, some of which include lack of experience, over-investment and poor inventory management.
While Dr. Ames says that list and his textbook still offer small business owners very valuable information, he “would overlay it with another list of 20 years or more of experience.”
In an exclusive interview with loans.org, Dr. Ames expanded on each of the 10 SBA-cited reasons for small business failure, providing further insight into what exactly it takes to be a “success” in today’s ever-changing economic climate.
One highlight of the interview points to Dr. Ames’ discussion of insufficient capital.
Dr. Ames said that many businesses spend huge amounts of money before they ever understand what their targeted demographic actually wants.
He said business owners end up “building what they want versus what the customer needs.” Then, when all is said and done (and often when it’s too late), the previously-hopeful entrepreneur looks back to see they’ve gone too far, fallen into too much debt and are at a point where they can’t recoup.
For Dr. Ames’ input on the remaining top 10 reasons why small businesses fail, please visit the full article at http://loans.org/business/articles/top-ten-reasons-small-company-fail.
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