Causes of Business Growth and Failure

Businesses are affected by the economy and sometimes the economy can have a dramatic drop in countries causing issues for some business mainly due to 4 factors. These factors are inflation, Economic growth, Exchange rates and unemployment.

Firms must consider many strategies when attempting to realize growth. Depending upon the stage of

Future profitability of the company cannot be ensured because the business is highly dependent on economic conditions

Small businesses are the backbone of national economy and play a leading role in innovations as well as in creating jobs. Small business has the intrinsic needs to growth. Obvious contributions of the growth of small businesses include the increased return on investment and job creation. The interesting and valuable question is how small business grows and are all small businesses growing? It is no surprise that the growth of business is a core topic both in organization theory and entrepreneurship, both are interested in the process and causes of business growth. Stages of growth models, which assume that business go through some distinct stages from birth to maturity, have been the most popular theoretical approach in academic to understand small business growth. Although the stages model of growth has been criticized for being too sequential and linear which is unrealistic and inconsistent with empirical evidence (e.g. Phelps et al., 2007; Levie and Lichtenstein 2010), various new stages models of business growth have been developed since the 1960s.

Small businesses are the core of the engine that runs the American economy. They are a very intricate and essential part of what makes America strong. Annually there were approximately 400,000 new small businesses started every year in the United States of America. Before the recession the normal business closure for companies in America were approximately 100,000 annually. This rate of exchange between new and closing businesses is known as “the birth and death rate of American companies”. After the recession the death rate of businesses in the United States has increase exponentially, growing from 100,000 companies a year to approximately 470,000 companies closing annually (Joseph, 2014). Most may think this is a result of the recession,

The purpose of this paper is to identify how different factors effect on the growth of small businesses. The growth of small businesses has been influenced by factors such as growth strategy, business forms, short and medium term goals, financing assistance, organizational structure and staffing needs, customers and promotion, and ethics and social responsibility. In this paper will to discuss how the different factors alter the advancement of small businesses.

1. What factors contribute to the rapid pace of change in business? Is the pace likely to accelerate or decrease over the next decade? Why? There are four factors that help the change of in business. They are natural resources, capital, human resources, and entrepreneurship. I think this is more likely to accelerate over time because people need these services. As people grow and develop their needs change. As things happen in people’s lives expectantly or expectantly they are more likely to need some type of assistance.

1. I believe that the single most important responsibility of a company is to make sure that the people that they serve are happy with their goods or service. I believe this to be most important because if the people are unhappy with your good or service, then the amount of business that you do will go down therefore causing you to earn less money and a failure in the business.

The concepts of the growth stall and its main underlying reasons highlighted in the article are closely related to many firms that functioned or that are still functioning today. Authors demonstrate that the crisis most often results from poor strategic decisions made by management and concludes that guarding against growth stall should be an important part of the strategy program. Since the article underlines those decisions that are strategic in nature and that affect a firm’s performance, the article is closely related to the content of the strategies management course.

Statistics from the Small Business Administration show 50% of all new businesses fail within the first five years and one-third of businesses are still open after ten years. There are many reasons businesses fail. They include:

Businesses grow through their products/ services every time they put a product on the market more and more people will find out about the product. For example Tesco have been using growth strategies as they are expanding with their services, such as Tesco Money, you can now have a credit card with Tesco which people who may don’t

Business growth typically entails purchasing additional land or acquiring other businesses, as well as issues like securing financing from

The United States Small Business Administration states that almost 50 percent of small businesses created will fail within the first year, while 66 percent survives during the first two years (The United States Small Business Administration, 2015). Envisioning the future of small business in connection with evaluating success or failure of small businesses is a captivating area for many researchers (Davidson & Kolfsten, 2003). A study on why small businesses in Mississippi have a higher failure rate than small businesses in New York. Stakeholders in Mississippi, particularly the small business owners, aspiring entrepreneurs, business consultants, lending corporation, investors, and customers would want to know the determining factors causing

However, followed by the statistic of UK SMEs that 10% of businesses close down each year. The median age of U.K companies is however 12 years, and nearly half of the companies in the UK have been in business for nearly 15 years. Many businesses do not last that long, however, 50% of new businesses will have failed within four years, according by (The Department for Business Innovation and Skills UK statistic report 2008). The failure rate and profits fluctuate with general economies conditions. The primary cause of business failure is incompetent management. Other reasons include poor financial control. ( Norman M. Scarborough, 2006)

Conclusion: This paper is intended to give clarity on the depths of small businesses, how they plan to succeed and get through possible adversity. The surviving mechanism it takes to maintain in a world where large businesses are expected to exist longer than small business.