Small Business in the U.S.A.

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Establishing and growing a small business in the United States can be a particularly daunting task when one considers the statistics that, on average, a full 51 percent of new businesses will fail within their first five years of operations (Bureau of Labor Statistics).  To better prepare themselves for success, new business owners can benefit greatly by properly organizing their purposes and goals, availing themselves to resources geared toward promoting their success and growth and learning the tough lessons experienced by those business owners who were unable to achieve success and longevity.

Starting a Business

In spite of the stresses inherently part of the new business process, the initial startup business is actually quite simple.  Entrepreneurs can take steps to plan and organize their beginning, which will ultimately serve to not only alleviate some of the stresses but also place them in a position for a stronger likelihood of success as they approach their endeavor with a systematic, organized plan of attack (Small Business Administration).  

Preparing a plan should be the first task for anyone planning to begin a new business.  Writing a business plan before one begins engaging in business is, effectively, a road map to success.  The business plan serves to identify the purpose and goals of the business, how the business will go about their daily activities to achieve their goals and the means by which the business will record its financial dealings, whether such recording is for tax purposes, tracking income and expenses, or preparing for presentation to secure funding (Anderson).  Forging ahead without the guidance the business plan provides will likely lead to scattered efforts, greater stress for the new business owner, and a more likely path to business failure.

Following the planning phase, consideration must be given as to the legal structure of the business:  whether the operation will be registered as a corporation, a limited liability company, a partnership, or a sole proprietorship.  While these are only a few examples of the possibilities, careful consideration must be given to the structure while considering the future plans for the operation. Whether the goal of the business is to eventually seek investment by public offering, whether financial risk and liability needs to be spread out amongst various partners and in what shares, and, also, how the tax reporting will be handled when considering how such reporting will affect the partners or owner are all very significant questions which must be answered prior to engaging in operations or, at least, within a specific time frame (Internal Revenue Service).  Ensuring that the business is legally recognized as an independent entity is the next phase of the process.  It is imperative that a business is properly registered in the state in which it plans to operate.  Proper state licensing, particularly in business operations which require specific permits and licenses such as real estate sales, the trades, or professional organizations, is necessary to ensure that consumer protection requirements are met and also to ensure that, should a contract require legal enforcement in a court of law, the business is legally recognizable in a court of law in order to bring action.  Conversely, when the new business is able to sue, the new business is also able to be sued.  Consequently, it is imperative for the future financial health of the business owner that proper insurance and bonding, if applicable, be secured to protect against any potential lawsuits or liability actions.  To better ensure that all these requirements are properly met, establishing a relationship with a good attorney and a good accountant prior to beginning operations will serve to alleviate some of the worry and concern by the new business owner that they are in compliance and protected, and such relationships, when established early, will also alleviate some of the stress of the threat of legal action or end-of-year accounting and reporting deadlines.  Comfort with the professionals who are working to support the business will be significantly higher when the relationships are built over time rather than a last-minute rush to find competent help because the need arose prior than expected.  

How Do Businesses Become Successful?

The best step a new business owner can take to better ensure their success is to utilize resources which are geared toward their success.  The Small Business Administration provides significant, and often, free training, mentoring, and networking opportunities which will serve to benefit any new entity regardless of the purpose or function of the business.  Their services will not only benefit new and fledgling businesses, but they will also work toward businesses which have been in operation over a long time period but are looking for assistance for expansions (Small Business Administration).  Additionally, businesses, both new and established, can better serve their future and success by establishing their culture:  understanding the needs and abilities of the business and hiring or associating with the people who would most benefit that organization’s culture, paying particular attention to HR issues such as discrimination and workplace bullying.  Maintaining a positive attitude and conveying that attitude through to exceptional customer service is also a means by which businesses can retain the expensive and time-consuming effort of customer building.  

Continued education and training are also key factors in ensuring that the business owner is able to take advantage of new technologies which may affect his business.  Recognizing that continued training efforts are often pushed to the bottom of the “to-do” stack of new businesses, such efforts can pay off ten-fold when they improve administrative operations, customer service relationships, or result in better, more efficient ways to market and operate the specifics of each business.  Continued training comes in many forms, some of which may be the traditional lecture-style learning and some may come from socializing events wherein great advice is received through mentor-style relationships with individuals who may have experiences they are willing to share (Finklestein).

Finally, and most significant, a business has a better chance of becoming successful when the business owner and manager exercises discipline.  All the efforts associated with planning, organizing, and establishing the business will be for not if the owner falters on his or her own discipline in running and managing the business.  The business plan, which provides the roadmap as to how the business will accomplish its tasks on a day-to-day basis, will provide no benefit if the manager does not maintain the discipline to follow the procedures established.  The financial reporting procedures will be of little use to the business if the manager does not religiously follow its own reporting procedures, and such a failure can easily result in lost revenue as the ability to track invoices and payments received becomes blurred.  Additionally, the course of business naturally has ups and downs according to cycles of demand and economic constraints.  The successful business manager will exercise his or her discipline to follow the business plan regardless of temporary changes, allow for tweaks to the plan to address accomplishments and necessary adjustments to stay competitive, and remain focused on the core markets and strategies to provide the best possible opportunities for success (Finklestein).

Why Do Businesses Fail?

Businesses fail for a number of reasons other than the inability to meet the success factors previously discussed.  Businesses which are started for the wrong reason, e.g., the entrepreneur dreams of making a lot of money, believe that ownership will free up quality time to spend with their families, or believes that ownership will allow them to work without answering to anyone or without oversight, are more likely to fail upon the entrepreneur recognizing that the reasons they entered business ownership are, in fact, compounded with ownership.  The realization that business start-ups often require significant capital infusions, take a great deal of time to establish and manage, and that customers and suppliers are often a great deal more demanding than a traditional job’s supervisor will quickly frustrate a new business owner and can snowball into quick failure or abandonment (Schaefer).  Additional considerations which will often quickly lead to failure include poor management, insufficient start-up capital, poor initial planning efforts, a lack of education regarding technology or advertising and marketing efforts, overexpansion efforts or spreading the business too thin, or simply selecting a location which customers cannot reach or which is within a community saturated with similar business services or without need for the services offered by that particular business.  


Statistics provided by the Small Business Administration and the Bureau of Labor Statistics provide daunting outlooks for new business owners.  The potential for an excessive loss of pride, money, and financial security are realities which plague every entrepreneur regardless of how long they have been in operation.  Balancing the success factors with the reasons for failure can assist in planning strategies as new entrepreneurs seek to stake their claim.  Above all, the primary factor which can assist in increasing the likelihood of success, while not necessarily guaranteeing it, is proper planning:  planning for finances, operations, organization, marketing efforts, expansions, and resources.  While no one factor establishes success or failure, proper planning will alleviate much of the stress of beginning, continuing, or winding down a business, allowing the business owner to focus his or her attention closer to the tasks which will increase the likelihood of success.

Works Cited

Anderson, Arnold. What Are the Main Purposes of a Business Plan? n.d.

Bureau of Labor Statistics. Entrepreneurship and the U.S. Economy. n.d.

Finklestein, Ron. What Successful Businesses Have in Common. 24 February 2006.

Internal Revenue Service. Publication 583, Starting a Business and Keeping Records. n.d.

Schaefer, Patricia. The Seven Pitfalls of Business Failure and How to Avoid Them. 2011.

Small Business Administration. 10 Steps to Starting a Business. n.d.