Chapter 5: Small Business, Entrepreneurship, and Franchises

Learning Objectives

• By the end of this chapter, you should be able to:
  • 5-4 Examine common reasons for small-business failure.
  • 5-7 Describe methods entrepreneurs can use to finance their small business.

5-4 Why Some Entrepreneurs and Small Businesses Fail

• Common causes of failure include:
  • Funding, management, and planning issues.
  • Key money-related problems:
  • Duration to achieve profitability.
  • Insufficient capital.
  • Cash flow difficulties.
  • Lack of requisite management skills.
  • Overexpansion by successful entrepreneurs can lead to failures.

5-4.1 U.S. Employer Business Start-ups and Closures (Table 5-2)

Discussion Activity 3

• Question: What are the prevalent reasons for small-business failures? What measures can entrepreneurs adopt to safeguard their businesses from failure?