According to Barclays Small Business Survey, there were 288,200 mainstream business start-ups in the first half of 2004, an increase of 23% compared to the same period last year. There were 164,400 mainstream business closures in the same time period. Therefore there was a 57% success rate for the first half of 2004.

There are no clear-cut statistics showing why businesses succeed or fail, although there are a number of reasons that could cause a business to fail such as:

Poor marketing: Successful businesses are ones that understand and meet the requirements of their customers.

Cash flow problems: Many businesses struggle through poor cash flow management.

Poor business planning: A business plan should cover aspects such as marketing, finance, sales and promotional plans, as well as detailed breakdowns of costs and profit predictions.

Lack of finance: Insufficient finance often means that businesses are unable to take opportunities available to them, or have to compromise – going for high cost solutions to problems, rather than lower cost ones that would yield greater competitive advantage.

Failure to embrace new technologies and new developments: In a fast changing world leading businesses are ones that make best use of advanced modern technologies in an appropriate way.

Poor choice of location: Location is a very important business decision. A good location is one that appeals to large numbers of customers, while at the same time minimising costs.

Poor management: Weak and inexperienced management is one of the major causes of business failure. Managers have to work extremely hard and understand their customers’ needs.

Poor human resource relations: Successful businesses motivate their employees to work hard to help the business succeed.

Lack of clear objectives: Successful organisations have clearly focused and communicated objectives that enable everyone in the organisation to pull in the same direction.