Success and Failure of SMEs

Success and Failure - Causes and Statistics

Around 250,000 new SMEs are created each year. These SMEs offer the opportunity for individuals to create their own futures and wealth. Most SME owners do not wish to grow into large firms and only a very low percentage do (rarely does  an SME eventually become a public company).

The failure rate for SMEs is very high. 20% fail within the first year, 75% fail after 5 years. The predominant reasons for such high failure rates include:

• Poor strategic management (bad choices, bad markets, bad products)

• Poor cash flow management (under-capitalisation)

• Low business management experience