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5 (Other) Reasons Small Businesses Fail

NEW YORK ( TheStreet) -- There are many reasons why startups never get to reap the riches of a Google (GOOG), Amazon (AMZN - Get Report), Chipotle (CMG - Get Report) or Starbucks (SBUX - Get Report).

An estimated 627,200 companies big enough to hire began operations in 2008, and 595,600 closed the same year, according to data collected by the Small Business Administration. This amounts to an annual turnover of about 10%. Companies without employees have turnover rates three times as high, mostly because they're easier to start and shut down.

The recession added to the problem, with failures at small companies -- according to the Small Business Administration, those with fewer than 500 employees -- accounting for roughly 60% of job losses in 2009.

And extreme circumstances such as natural disasters -- last month's earthquake and tsunami in Japan, the devastation in Haiti last year or Hurricane Katrina in 2005 -- can take down small businesses as sure as they can wreck the building a business is in.

Lots of articles have been written about why small businesses can't get off the ground, most pointing to them having either too little capital or no compelling business proposition or product.

But there have been other reasons why many small business were forced to shut their doors, one, two or 20 years after opening.

TheStreet came up with five other key reasons small firms fail:

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AMZN $382.51 -0.82%
CMG $665.38 -0.82%
GOOG $568.05 -0.58%
MCD $99.96 -0.04%
SBUX $93.47 -0.80%


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S&P 500 2,105.83 -11.56 -0.55%
NASDAQ 4,973.6760 -34.42 -0.69%

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