Proactive strategies to reduce small business failures improve their growth and sustainability. US Labor statistics show that small businesses faced a considerable decline in their survival and that statistics remained steady for decades, indicating the need for in-depth research to find the gap and address the survival of future businesses.
Small businesses are the backbones of both developed and developing economies of the world and play a vital role as drivers of growth and development (Blankson et al., 2018). According to the US Bureau of Labor Statistics (McIntyre, 2020; US-Labor, 2020), small businesses have an 80%, 70%, 50%, and 30% survival rate across one, two, five, and ten years in business. About 25% of new businesses cross the 15th year (Deane, 2022; US-Labor, 2020). This trend has remained the same for decades. Identifying the dominant causes of failures and using those key factors to create holistic, proactive failure prevention strategies reduces failure rates and improve business sustainability. Successful businesses contribute to sustained employment and advances in local, national, and global economies.
The scope of this research is on Small Technology Businesses (STBs) which are approximately 35% of small businesses. The question is, how can we address the short lives of the STBs and improve their sustainability? This article summarizes the failures in small technology businesses, categorizes them according to business functions, and proposes strategies to address them. Mapping failures to business function(s) allows for holistic and proactive solutions entrepreneurs could implement for growth and profitability. The literature survey analyzed the causes of failures, events that led up to failures, and the consequences of the failures. It also summarizes other studies investigating the failures and the proposed solutions, intervention trigger factors, actions, and gaps to address. Also presented is a brief analysis of the studies about the mistakes companies should avoid for continuous value creation and the steps that could prevent failures.
Authors: Krishnakumar Nair
Link: https://doi.org/10.28945/5285
Cite as:
Nair, K. (2024). Small Technology Business (STB) failure prevention strategies using potential failure modes. Muma Business Review 8(3). 15-30. https://doi.org/10.28945/5285