1.0 introduction
A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. The legal definition of "small" varies by country and by industry, ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees in the European Union, and fewer than 500 employees to qualify for many U.S. Small Business Administration programs. Small businesses can also be classified according to other methods such as sales, assets, or net profits.
1.1characteristics of a small business
Not every small business eventually grows to the size of large corporation. Some businesses are ideally suited to operate on a small scale for years, often serving a local community and generating just enough profit to take care of company owners. Small-scale businesses display a distinct set of identifying characteristics that set them apart from their larger competitors.
Revenue and Profitability
Small-scale business revenue is generally lower than companies that operate on a larger scale. The Small Business Administration classifies small businesses as companies that bring in less than a specific amount of revenue, depending on the business type.
Employees
Small-scale businesses employ smaller teams of employees than companies that operate on larger scales. The smallest businesses are run entirely by single individuals or small teams. A larger small-scale business can often get away with employing fewer than one hundred employees, depending on the business type.
Market Area
Small-scale businesses serve a much smaller area than corporations or larger private businesses. The smallest-scale businesses serve single communities, such as a convenience store in a rural township. The very definition of small-scale prevents these companies from serving areas much larger than a local area, since growing beyond that would increase the scale of a small business's operations and push it into a new classification.
Ownership and Taxes
The corporate form of business organization is not well-suited to small-scale operations. Instead, small-scale businesses prefer to organize as sole proprietorships, partnerships or limited liability companies. These forms of organization provide the greatest degree of managerial control for company owners, while minimizing the hassle and expense of business registration. These businesses generally do not file their own taxes; instead, company owners report business income and expenses on their personal tax returns.
Locations
A small-scale business, by definition, can be found only in a limited area. These companies are not likely to have sales outlets in multiple states or countries, for example. A large number of small-scale businesses operate from a single office, retail store or service outlet. It is even possible to run a small business directly out of your home, without any company facilities.
2.0 Reasons to the failure of small business in the 2nd year of operation
• Insufficient capital
The common fatal mistake for many failed businesses in Tanzania is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales. It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. It is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.
• Lack of planning
It is critical for all businesses to have a business plan. Many small businesses in Tanzania fail because of fundamental shortcomings in their business planning. It must be realistic and based on accurate, current information and educated projections for the future. Anyone who has ever been in charge of a successful major event knows that were it not for their careful, methodical, strategic planning -- and hard work -- success would not have followed. The same could be said of most business successes.
• Overexpansion
A leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies. If expansion is necessary after careful review, research and analysis, identify what and who you need to add in order for your business to grow. Then with the right systems and people in place, you can focus on the growth of your business, not on doing everything in it yourself.
• High interest loans
High interest payments due to loans, this lead to the failure of a business in a short time, if the business failed to produce enough profit for interest payment and at the same time for running the business. for example is pride Tanzania which gives loans to small business men and women but they supposed to pay their loans seven days after the day they receive the loan.
• Lack of Adequate Formal Education and Alternative Payable Employment
Most people in Tanzania enter into small business because of lack of adequate education and difficulty of finding formal employment. There are very few who were formerly employed engages in small business due to various reasons including retrenchment. The findings revealed that majority enter into entrepreneurship and small business because they do not have adequate education background and therefore it is difficult for them to find alternative paid jobs. Since they luck education on how to run a business most of the collapse in a short time.
• Personal use of business funds
This is that situation of combining personal spending or family spending with the business capital without returning the amount used back to the business. Many business owners in Tanzania combine their family expenses together with the business expenses, therefore at the end even the capital used to start that business is consumed and business collapse.
• Poor location
Location is critical to the success of any business. Whereas a good location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise. Some factors to consider, Where your customers are Traffic, accessibility, parking and lighting Location of competitors Condition and safety of building Local incentive programs for business start-ups in specific targeted areas The history, community flavor and receptiveness to a new business at a prospective site. And most small business operators in Tanzania do not consider these factors thus lead to the failure of their business.
• Poor management
Many businesses in Tanzania fail due to poor management as the number one reason for failure. New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don't do well, and seek help, business owners may soon face disaster.
• Lack of experience
Most small business owners involve themselves into a business with little or no experience and without first learning something about the industry or market. Many people inter into a business by coping some of their neighbors, relatives or friends businesses, when they see a person operating a business and it achieve profit they tend to open a similar one with the notion that it will generate profit just like the neighbor’s while he don’t know anything about the business.

3.0 Recommendation
Improving the business environment is absolutely essential. However, alone, this measure will not quickly boost a critical mass of Tanzanians small businesses into successful businesses that create significant incomes, quality jobs and contribute meaningfully to government revenue. This is because most of the small business owners have little knowledge of entrepreneurial skill which is essential in operating their businesses. And it also time for the small business vendors to do their party since the government and some of the private sector have already establish a foundation for them. For example:-In the National Strategy for Growth and Reduction of Poverty (MKUKUTA), the Government has committed itself to promote private sector participation including Small and Medium Enterprises. The Sustainable Industrial Development Policy - SIDP (1996 - 2020) places specific emphasis on promotion of small and medium industries through the following measures: supporting existing and new promotion institutions, simplification of taxation, licensing and registration. The National Micro Finance Policy (2000) covers the provision of financial services to small and micro enterprises in rural areas as well as in the urban sector that are engaged in all types of legal economic activities.

4.0 Conclusion
When it comes to the success of any new business, the business owner are ultimately the "secret" to their success. For many successful business owners, failure was never an option. Armed with drive, determination, and a positive mindset, these individuals view any setback as only an opportunity to learn and grow. Most self-made millionaires possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.

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United States Small Business association (2003) Business managers manual, the university of Chicago press, Chicago, USA.
Saleemi A, (2006), Simplified Commerce (Revised edition), Saleemi publication ltd, Nairobi, Kenya.