Why Do Small Businesses Fail In The United States

There is an ongoing problem in the United States, and that is the amount of small businesses that start and fail every year. This paper will show the research on the problems with small businesses and why so many fail each year, in order to help new and future small businesses understand how to succeed in the business world and to lower the rate of businesses that fail every year in the United States. Before diving into the reasons why businesses fail and the solutions to failure, one must first understand just what a small business is and the significance of the small business world. “The office of Advocacy defines a small business as an independent business having fewer than 500 employees” (Ryans 102). One thought may be on what the importance is of small businesses to the United States economy, to which there are many reasons. Small firms represent 99.7 percent of all employer firms, and they employ about half of all private sector employees. They pay 43 percent of the total U.S. private payroll, and have generated 65 percent of net new jobs over the past 17 years. Approximately 43 percent of highly educated

economy greatly depends on small businesses. One reason they do is because “in 2009, there were 27.5 million small businesses in the United States, according to the Office of Advocacy” (Ryans 98), where as seen through recent data, there were only 18,469 large businesses operating in 2008 in the U.S. Small business employ approximately half of workers in the U.S. “Of the 120.9 million nonfarm private sector workers in 2008, small firms employed 59.7 million and large firms employed 61.2 million. About half of small firm employment is in second-stage companies (10-99 employees), and half is in firms that are 15 years or older” (SBA). Small businesses also create a large share of net new jobs. “They accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009”