Why Some Small Businesses FailIt is difficult to measure the size of a company. According to the Department of Trade and Industry (DTI), an SME can be described as a business that employs 0 to 49 people. However, a company like Chemical Plant can employ fewer than 49 people but have a turnover of £20 million. So, based on the number of employees, the DTI would classify it as a small business. However, based on the level of turnover, it could be classified as a large enterprise. The size of the company is generally measured by the number of employees1. The number of SMEs is constantly increasing. There are many reasons for the increase, such as; improved technology, ability to subcontract part of businesses and public sector encouraged to shrink. There are also push and pull factors that help people decide to become self-employed. “Push factors” include people who are unemployed or laid off and decide to venture out on their own. This could simply start your own window cleaning service. Another “push factor” is the “Pratt factor,” which is when an employee finds themselves working for someone else with less talent and wonders “why am I working for you?” he then decides to start his own business. The number of SMEs is constantly increasing. There are many reasons for the increase, such as; improved technology, ability to subcontract part of businesses and public sector encouraged to shrink. There are also push and pull factors that help people decide to become self-employed. “Push factors” include people who are unemployed or laid off and decide to venture out on their own. This could simply start your own window cleaning service. Another “push factor” is the “Pratt factor,” which is when an employee finds themselves working for someone else with less talent and wonders “why am I working for you?” so he decides to start his own business. “Pull factors” include people's growing desire to take advantage of an opportunity, turn their hobby into a business, the motivation to work independently, and as people get older they sometimes inherit money; sometimes they invest this money in a business venture that perhaps they previously couldn't afford. The failure rate for small businesses is very high. The chance that your new business will make it past its third year is less than 25%. In other words, more than three...... half of the card... elves in a set too deep to pull out. It was now too late to ask for advice and the shop closed. My advice to my friend was to learn from his mistakes and try again. It is inevitable that small businesses will continue to fail. Sometimes the reason for failure cannot be avoided. However, by reading this essay you should understand that, in most cases, failure could have been avoided. In fact, in 82% of cases where businesses fail, the owners could have done something differently to prevent this from happening. REFERENCES1 Business Studies by Dave Hall, Rob Jones, Carlo Raffo. Edited by IanChambers.(1996)2 www.compulink.co.uk3 www.bcentral.com4 The Business Environment (second edition) by Ian Worthington and Chris Britton. Published in 1997 by pitman publishingJOURNALS USED¹ Journal of Small Business and Enterprise Development, Vol 9, Issue1. Learning the hard way: Lessons from owner-managers who have closed their businesses. By David Stokes and Robert Blackburn.² Journal of Management Development, Vol 13, Issue 7. Management skills in small businesses. By Graham Martin and Harry Staines.