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Reasons for small business success and failure: Reflections of a literature review

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  1. Introduction
  2. A review of the academic literature
  3. Reasons for business failure
  4. Reasons for greater chances of success
  5. Conclusion
  6. Works cited

Within all major economies, the role of the small business is significant; as such it is important to understand the factors associated with why some small businesses fail and why others are successful. For the purposes of this paper we will assume that a small business is a for-profit enterprise which is owned independently and does not hold a dominant position in the broader industry. There is widespread agreement that a nation's prosperity is linked with the performance of its small businesses, as entrepreneurship creates jobs, develops innovation and creates wealth. Unfortunately though being a small business owner is not easy as there is a statistic in the United States which that more than 50% of small businesses fail in its first year of operation and 95% fail within the first five years of operation. (Dun & Bradstreet 2004). This is a loose statistic, but it speaks to the greater issue of most small businesses failing within a short period of time after inception.

[...] However, as these articles revealed, there is a tough reality that most of the small businesses that start will not last past their first few years in operation. While there cannot be any one reason why businesses fail or succeed, there are determinants that can help judge how successful a business will be: resources. The more resources that a business have the more of an edge they have on other businesses that waver on the line between success and failure. From this essay it is clear that a significant determinant of small business success comes down to resources and [...]


[...] As for the reasons why it seems to fall along lines of gender, well that is an issue that is best left for another discussion. (Watson 2003, 262-77). In their article, Competitive Advantage and Entrepreneurial Power, Graham Beaver and Peter Jennings give their own accounts of the ?dark side of entrepreneurship?. They argue that most businesses fail because they do not prepare for the adversity that they are inevitably going to face in the course of their business. Because of their ?inability to adapt to a series of crises caused by business development?, along with mismanagement of other resources is crucial to success. [...]

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