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What are Common Reasons that Small Businesses Fail?

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Question:
In your opinion, what are some of the common reasons that small businesses fail?

Answer:
We can identify a few common problems:

Not Enough Slack
The biggest reason small businesses fail is lack of slack in the organization. Everything’s fine as long as things go according to plan, but when an unforeseen problem occurs (like the current recession), we lack the cash, or the inventory, or the manpower – whatever – to deal with it. We have to keep some resources in reserve.
Working with Blinders on
Sometimes we small business owners are determined to sell our products – even if there’s no market for them. We need to be versatile – and realistic!
Poor Planning
We may like to think we’ll deal with problems as they occur – that we’ll learn as we run the business. Too risky! We need a business plan, with contingency plans that take into consideration every foreseeable event.
Faulty Research
We may think we know an industry, but judging from our own experience isn’t enough. We need solid research to back up our assumptions before we’re invested.
Neglect
We may have a genuinely terrific idea for a product, but it won’t market itself. We can’t neglect the tasks that we’re not looking forward to – the advertising perhaps, or the pricing. If we don’t have the skills for them, we’ll find someone who does!