I believe that it’s easier to succeed with small businesses than ever before. There are more opportunities for entrepreneurs to start small businesses today than at any previous time.

Here are some good reasons for why I believe this is true.

A) With the increase in population comes an increase in opportunities for small businesses.

Generally, a sparse population requires a small business owner to provide a wide variety of goods or services to survive. With a denser population, the small businesses can still survive by providing a very narrow range of products or services.

For example, in a smaller population a small business which provides gardening services would probably need to offer many things. Services could include general garden maintenance, planning, tree felling, lawn cutting, vermin control, pond planning and maintenance, hard landscaping etc.

With a bigger population a small business could thrive perfectly well by providing just one of these services, as there are more people who will need it.

B) The costs involved in starting and running small businesses has never been so low in proportion to income.

Technology has replaced many of the things which people used to do, and technology does the job a lot more cheaply.

Today it’s possible to reach literally millions of potential customers around the world very cheaply.

For example, only a few decades ago the cost of mailing to thousands of households was prohibitively high. Unless you had a very good product or service which sold well, a small business just wouldn’t risk it.

Another example, business premises security used to involve security guards walking around checking that all was well. Now a good security system can be bought for less than 1 week’s pay for that security guard, and it will work 24 hrs per day for years, for no pay.

C) Because modern life is so complex today, small businesses and individuals are open to new ideas, products and services like never before.

This creates a huge market for training courses, information provision services, educational aids, specialised products and services, novelties, etc.

With this great diversity come great opportunities to combine different products and technologies, thus making whole new areas of business possible.

For example, you can combine a low-light camera with wireless communications and a bird box. This means a nest may be watched remotely on a television or personal computer screen.

Another example would be to combine voice-chip technology with passive infrared technology to make it sound as though you have a huge dog indoors whenever anyone approaches your house.

In our recent history, these opportunities just didn’t exist.

D) It may not feel like it, but many people today have a lot more leisure time and a higher disposable income than in any previous age.

This spare income (and with the current attitudes to loans, a little more besides) tends to get spent on sports, games, hobbies, crafts, amusements, entertainments, holidays and weekend breaks etc.

This creates many opportunities for the entrepreneur to start up small businesses to satisfy all this extra demand.

E) To thrive in a modern society you need to have a lot of different skills.

Nowadays people cope with a variety of complex tasks. They buy and use a wide range of consumer equipment, fill out many forms, and communicate with all kinds of people from all walks of life (often from different countries and cultures). They also do difficult transactions like house purchasing, and so on.

All this is a long way from the average people who were around just a few hundred years ago. Many were farm labourers who could barely read or write and never travelled more than a few miles from home.

So now, the pool of potential business people is far greater than ever before. If a person can live well in a modern society, they already have the abilities they need to start up a small business enterprise and succeed.

The good news also is that if you lack a certain skill which your small business needs, then you can probably employ someone with that skill far more easily than ever before.

F) More people have access to money than ever before.

Until the late 1960s, most people were paid weekly and spent money as they earned it.

It was normal among manual workers to run right out of money around the time of their next pay packet, which often contained notes and coins!

Today most people have many bank accounts (with overdrafts) and access to credit cards, which alone have spending limits equal to a half or full year’s income.

Savings and share holdings are greater than ever before. A large proportion of the population can raise money on their house and if they don’t mind paying a high interest percentage, they can borrow with no security at all.

A great variety of people and institutions are now willing to lend money for good small businesses proposals.

With access to credit, you can buy the product, ship it to the customer and get paid before you have to pay for the goods which you sold. This just wasn’t possible until very recently.

G) Advice, courses and books about starting small businesses are within easy reach of everyone.

Researching your chosen business area has never been easier with the Internet so readily available.

Not so long ago, you would have needed to buy many books and read them all to get the specific information you required. Now you can ask a search engine very specific questions and get very specific answers, almost immediately.

This frees up small businesses and enables them to be far more productive and enterprising.

H) If you start a small business today you have an immense amount of technology available to you.

Computers, printers, copiers, audio and video recording and playback equipment, telephony and the internet are all easily available to any entrepreneur wanting to get started in a new small business enterprise.

Not long ago, the average multi-national company lacked the computing, communicating and printing power available to the ordinary person today.

You can probably think of at least 6 different ways to get a simple message to someone on the other side of the world. 5 of those messages would typically arrive less than 1 minute after you sent them.

Just 100 years ago, (and remember mankind has been around for about 3 million years) this same message would have involved horses and steam ships and would have taken months.

This massive improvement in technology (especially in communications and information) has really opened up the field to the individual who wants to go ahead with a new small business venture.

I) Small businesses starting up today have far more choices available to them.

In previous times, it was quite common for there to be only a few companies that they could go to, to buy business supplies. Whatever business you care to name, you would not find many suppliers of the materials needed to conduct that business.

Unless your business is in a very specialist area, you will now find you can source your supplies from a great many firms. This in turn drives your costs down, as you can shop around for the best deals.

For example, there used to be very few ways to get your goods delivered to your customers. Nowadays you could chose from literally hundreds of different carriers.

New companies can chose anywhere in the world to set up their small businesses, or indeed where to place any part of their business.

I know of a successful paintball company, which operates in the UK in summer. But when the business falls off due to the cold winter, they find new customers by simply moving the company to Brazil, and then return the following spring.

They also take advantage of the cheaper labour in Brazil to manufacture the paint balling equipment, and when back in the UK use the greater expertise in the UK to program their systems.

Not so long ago this flexibility of operating a small business would have been totally impractical.

Conclusion.

There are far more opportunities to start small businesses than ever before and entrepreneurs who do start new small businesses at home are more likely to succeed.

There are more potential customers, it costs less to start up and you have more choice over the kind of business to go into. Other benefits are a more skilled and educated workforce, and easy access to financial support.

If you do want your own enterprise, you can also use the power of the Internet to carry out good and fast research, and to support your business in many ways. I believe there has never been a better time to start up new small businesses.

Being a small business owner is not easy. Apart from the problems that the small business owners have to face in operating business, the severest of problems is in raising capital. It is not easy to raise capital for business use; particularly in an environment in which small business owners are accorded a status similar to borrowers with bad credit. Self employment is considered a bad credit case because of the unstable income generation through small business. It is said how a small business owner will pay fixed installments on a loan if he has not made much income (profits) in a particular month. Banks and financial institutions are thus not receptive to the demands of the small business owners.

However, a loan can be designed particularly suited to the small business owners. Few lenders, who did not want to lose on the opportunity of lending to the rising group of small business owners, devised such loan. It is known as small business loan. Small business loans are advanced to small entrepreneurs who invest it in a series of purposes like expansion of their facility, buying technology, purchasing new tools and equipments, and also to buy raw materials and pay wages to workers.

Lenders advance small business loans on the principle of moderate risk, which is no different from lending any other loan. The principle of moderate risk implies lending by keeping sufficient cover against risks. Therefore, while designing the terms of the small business loans, lenders are often seen to be using this principle. Take for instance, the rate of interest. The rate of interest charged on small business loans is higher than the normal. Similarly, lenders will only lend a limited sum on small business loans. These are sufficient proof of the manner in which lenders prepare for any risk that may emerge in the future.

What differences can a borrower notice in small business loan, which goes in his favour? Borrowers can get an arrangement designed by which they can repay loan installments with ease. Small business loan with a flexible repayment schedule sufficiently solves the problem of the self employed people. Through a flexible repayment schedule, borrowers do not need to make repayments of a pre-specified amount and a pre-specified period. Depending on the income that they are able to salvage in that period, they can make repayments accordingly. Therefore, in certain months (or any periodicity chosen by borrower to make repayments) there can be underpayments, overpayments, and no payments at all (termed as payment holiday).

However, not all lenders may be ready to accommodate your financial condition thus. If you consider the clause of flexible repayments so necessary in your case, then you must mould your search operations accordingly. With the help of brokers, searching small business loan according to ones desired criteria is not very difficult. Brokers are associated with several loan providers in the UK. When a person applies for small business loan to these brokers, they forward it to all the lenders who they think can appropriately advance loans to the entrepreneurs. The broker conducts the entire search operation. The borrower just has to choose from the large number of deals that the lenders forward. Brokers can also arrange small business loans from lenders who accept flexible repayment. Similarly, other specific requirements of borrowers can be incorporated into any small business loan searched. Brokers charge certain fees for their services. However, the best deal that these help to find will make the issue of fees irrelevant.

Small business loans can be either short term or long term. A short-term small business loan is repayable in a period ranging from certain months to a year. Long-term small business loans on the other hand, advance money for as long as 25 years. Depending upon ones requirement, the small business owners can decide term of repayment and other terms and conditions of the small business loan.

There were about 146,000 business startups a year, and an average of 12,000 business bankruptcies per year from 1994 to 2004 in Canada. A 2004 Statistics Canada study on small business failure rates “Key Small Business Statistics – January 2005: How Long Do Small Businesses Survive?” found that the first few years were critical. While almost three quarters of small business startups survive the first year, less than one third of micro companies (less than five employees) were in business after five years.

These statistics by themselves may be of little value to you directly. We know how many small businesses survive and for how long, but it’s far more important to know why some survive and others do not. There are a lot of studies on small business failure. Searching “reasons for small business failure” with quotations on Google will give you almost 700 results (about 38 million without!). “Why small businesses fail” will give you almost a thousand.

The 1997 study by Statistics Canada “Failing Concerns: Business Bankruptcies in Canada found major internal factors of small business failure was management deficiency, financial management problems and poor marketing.

The Small Business Administration study “Financial Difficulties of Small Businesses and Reasons for Their Failure” in 1998 found several causes of small business bankruptcy: outside business conditions (38.5%), financing (28%), inside business conditions (27.1%), taxes (20%), disputes (18.8%), personal calamities and other (32.9%)

There is a wealth of information on this subject, but what are the common factors? There are four basic areas:

External factors

External factors include new competition, your major client moving out of town, poor weather if you’re a seasonal business, or economic downturns. They’re often largely out of our control, and may be unique to your particular company, but there are often ways to mitigate them. For example, if you have a seasonal business, such as a landscaping company (at least up here in the cold north it’s seasonal) you could buy a bobcat to provide income during your off-season with snow removal. The bottom line is, have a contingency plan for external factors that could have a negative impact on your small business success.

Lack of management

Big companies have the luxury of being able to hire several people to get all the jobs done that need to be done, but chances are you’re going to have to do it all yourself, at least for awhile. That means you’re not only going to have to develop your product or service, you’re also going to have to make financial, accounting, legal, marketing, human resources, and purchasing decisions.

You may do some of these tasks very well, but it’s unlikely that you do all these tasks well, and even if you do, you might want to contact a lawyer and an accountant at the very least. And, research, research, and research some more, and when you’re done researching, find an expert or two bounce ideas off and give you solid advice.

Lack of planning

Small businesses often fail because of lack of planning. Let me make a bold statement: the single-most vital part of your business success is your business plan. Why? Simply put, your business plan specifically and concretely lists your goals for the next few years. It spells out, step by step, how you’re going to meet those goals, and gives you something to measure your performance against at the end of your business year.

Finally, a complete business plan helps you get financing and includes a marketing plan, which addresses lack of marketing and insufficient financing, two more often cited reasons for small business failure.

I have one more thing to say about business plans. It does very little good to write a business plan, put it in a drawer and never look at it again. That same 1997 Statistics Canada study we talked about earlier found that successful small business owners refer to and revise their business plans often.

Lack of marketing

Most small businesses seem to think it takes a lot of money to market their product or service effectively. That’s simply not true. There are many ways to market inexpensively. You could use direct mail marketing which is as cheap as a stamp, or email marketing, which costs nothing. The point is, you need to get your product or service “out there” somehow. You may have the best product or service out there, something completely unique from anything else, but what good does that do if nobody knows about it?

So there you have it–my thoughts on the main reasons why small businesses fail, and how you can avoid becoming a small business failure statistic by developing a contingency plan, consulting with experts, and developing and using a business and marketing plan.

If you are thinking of starting a small business, I’m most certainly not trying to discourage you. I sincerely believe being in business for yourself may possibly be the most rewarding career there is, but a little knowledge can go a long way towards arming you against small business failure.