Three Important Steps to Overcome Small Business Failure

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Nobody ever says that starting a small business is easy. According to the US Bureau of Labor, 20% of them fail within the first year. By the end of the fifth year, 50% would have failed. But look at it this way: this means 80% of small businesses beat that statistic.

The Small Business Postmortem

What happened, and what can you do about it?

Think forward to your next venture by looking into your previous one. The way to overcome failure is to look straight at it and utilize the resources you have at your disposal to fix the faults.

There are three A’s to overcoming small business failure: Ask, Analyze, and Act.


What do you have left of your business that you can use for your next venture? Are you able to sell off the rest and make the most of it? You’ll start from scratch if you have to, but as much as possible, save what you’ve got so you can reinvest it into your next venture.

Also, ask yourself, how did you manage your business? How much time were you able to spend on it, to focus on it? Running a small business could start as a side venture, but to really make it grow, you need to put more time and focus on it, sometimes at the expense of another job.

Did you have enough capital? Depending on the type of business you’re trying to establish, you may not have had enough capital. The Small Business Administration has a helpful startup cost calculator that should help you figure out how much you actually need.

Did the business fail from lack of resources? Untrained or unskilled personnel? Understand how the staff at your small business worked and what they lacked. Also, consider what you lacked as their supervisor or manager. There’s also the possibility of a wrong decision that led to your company’s failure.

How was your marketing? Did you approach the right audience? Did you use best practices in marketing towards the kind of people that would take an interest in your venture? It’s more than just throwing money at Facebook Ads trying to advertise your business.

Finally, ask what your business had on hand to help it. Did you have the right tools and support for your business model? Did you have good supply lines, or were those lines unreliable?


After identifying those questions, it’s time to answer them all. Organize your data to create a comprehensive SWOT (Strengths, Weakness, Opportunities, Threats) analysis of your business model.

This analysis should be done even when you’re not trying to overcome a failed small business. The SWOT analysis can be a helpful tool for business owners to audit their company’s performance and make improvements as they go. In this case, the analysis should help you determine where your business broke down and what opportunities you failed to capitalize on.

For example, consider your business’s strengths and consider whether you’ve capitalized on those strengths. The products that were selling the most probably hadn’t gotten marketed as much. Maybe a product was so popular that you ran out of it, and couldn’t adequately meet demand.

Another example: Your business had been growing rapidly, but you weren’t able to make the most of the opportunity due to being unable to keep things organized. You didn’t have the right tools to manage your company, from personnel to inventory. It led to the structure breaking down because you didn’t take the opportunity to create a system when you could.

Analyzing each part of SWOT doesn’t just show you where you went wrong, but it also shows you what you can do right, which leads to the next step.


Gather up the assets you were able to save or recover from your losses. Put them into your new business. And now that you know what kind of capital you need make the investments that your analysis shows you need. And always have a backup source of income that can help support your business. Having a contingency plan is critical to survival.

Put resources into your company. Digitalize your company and let the software help you do the work of organizing the workforce, products, and supplies. Your business model needs to adapt to the changing times. It seems complicated at first, but some platforms can help you, such as SAP Business One. Ecommerce integration becomes more straightforward because it connects multiple platforms and services that online retailers need and puts it all in one place.

And don’t just invest in your company. It’s time to invest in yourself as an entrepreneur and your employees. By enriching your knowledge constantly and helping your employees develop skills to better themselves, your business can succeed. Utilizing automation to make tasks easier can be a good thing, but this also means that you and your employees must also be constantly evolving into better versions of yourselves so you can do more.

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