Causes of Small Businesses’ Failure: An Exploratory Study within Jeddah’s Governorate in Saudi Arabia


This study aims to highlight some of the reasons for the failure of small businesses, such as unemployment among Saudi nationals, reliance on expatriate labor, the absence of a regulatory framework, and difficulties in the funding of some financial institutions. Thus, the objectives of the study are: to highlight the important role that small businesses represent in the Saudi economy, to find appropriate solutions for the failure of small business, to create a framework to support the small business, and find financing mechanisms for small business. To achieve the overall objective of the study, a field study was conducted with owners of small businesses within Jeddah’s governorate in the Kingdom of Saudi Arabia. A purpose-designed questionnaire was prepared and sent to participating businessmen. The data gathered from those questionnaires was compiled and statistically analyzed using IBM SPSS Statistics® software package. After pilot testing, a questionnaire was sent to 130 businessmen with 100 completed questionnaires returned (approximately 77%). Data was analyzed by the researcher using frequencies, percentages and Chi- square calculations. The results of the study indicated that poor management, a lack of bank loans and workers training were the most important reasons for failure. The study contains five sections, section I: Introduction to the study and previous studies. Section II: The importance of small projects and the most important contemporary problems and challenges. Section III: Analysis of results of the study. Section V: Conclusions and recommendations. In light of the results of this study, the researcher provided recommendations in order to highlight the factors that lead to, either the failure or success of small businesses.

Keywords: Failure Causes, Financing, Jeddah, SMEs, small businesses

Article Review Status: Published

Pages: 88-122 (Download PDF)

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