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 factorsExternal 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 managementBig 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 planningSmall 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 marketingMost 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.

Deciding how to advertise your business on the Internet is not an easy decision, especially when you’re on a budget. There are so many different advertising platforms in existence that gain you traffic in exchange for the majority of your advertising budget. With so many options available and some very expensive, it’s difficult to know whom to trust. Enlighten yourself to a new technologically savvy way of marketing and promoting your business that your competition may be unaware of. Google Places is very beneficial to many businesses and this is why:Google Places is free. This means that if you decide to advertise your business using this service, your advertising budget remains untouched. Most online advertising costs money i.e. Pay-Per-Click (PPC), which can cleverly eat into your advertising budget if you’re not careful. Additionally, there is much to be learned before you likely see any success and many people do not realize this.Google Places is obviously owned by Google; think of the benefits to you since this is the case. Google is the most popular and frequently used search engine in the world as millions of people use their search engine daily. Additionally, Google is constantly changing and testing their algorithms to ensure they are giving people the exact information they are searching for.Now, imagine consistently being on the first page of Google’s search engine and how that could benefit you and your business. Increased visibility on Google equals potentially massive exposure. The exposure will surely send highly targeted traffic to your Google Places listing.A huge advantage to using Google Places is that it is very easy to get set up, and you’re visible almost immediately. If you know how to type and operate a mouse, then you’re all ready to set up a basic listing. Everything is labeled step-by-step. There are also strategies to utilize to ensure you are gaining the maximum amount of exposure possible with this service. Just make sure you read on these strategies so you are getting the most of this free service.The great thing to know about Google Places is that your competition will most likely not be savvy enough to claim their free listing here. If you know that it’s such a simple process to list your business there, then all you need to do now is to take action and verify your listing. Don’t let this simple process go without taking advantage of it. Either have your webmaster claim your Google Places listing or do it yourself correctly.