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Q: Inyour experience as a lender, what have you found to be the mostcommon reasons businesses fail?
A: Howdo businesses fail? Let me count the ways. Infinity is a good roundnumber, but short of that, the most common reason for businessfailure I've encountered is lack of experience. It'sdifficult for lenders to watch historically successful people startbusinesses in which they have little or no experience and thenflounder and fail. While accumulating experience in the industryyou plan to start your business in won't guarantee yoursuccess, not having it can statistically increase your odds forfailure. Other reasons for failure I've seen-such asinsufficient capital, heavy competition, uncontrolled growth,inappropriate location, seasonal business, tax issues, fraud,management turnover or lack of proper planning-pale in comparisonto lack of experience. As a good rule of thumb in business,don't do what you don't know.
Doug Hood is a co-founder of Rainmaker Capital Corp., acapital acquisition consulting firm in Cartersville, Georgia.Co-founder Marilea S. Hood contributes to this column. Sendquestions or anecdotes via e-mail to doughood@mindspring.com.
