What Are The Main Reasons A Business Fails?

What Are The Main Reasons A Business Fails?

Wednesday, January 6th, 2016

Roughly 50% of all startup businesses fail in the first 5 years. Those are pretty discouraging statistics, especially for those with a small business who are facing hard times. The self-doubt and worry that you may be one of that 50% can make the business owner feel helpless. However, there is hope on the horizon. For instance, not long ago the fail rate for startup businesses was 95% in the first 5 years! If you are aware of these causes of failure, you stand more than a fighting chance of not only surviving for 5 years, but for thriving for many years to come.

Why Do You Want to Start a Business

Most of the time, when someone wants to start their own business, it’s because they want to be their own boss They look at the skills they must use to make money for their boss, and that he makes the lion’s share of the money while they do the work. They reason that if they owned the business, they could go golfing every Friday while the grunts do the work.

If this is why you want your own business, you can be sure that you won’t last long. Corporations that can afford executives that never seen to work are not the same as small businesses owned by entrepreneurs. You will have to do your own work, and hire and train employees to pick up the work you can’t get to. It takes a good attitude towards work, mental fortitude, and discipline to take care of details that keep customers happy and keep them coming back.

If you think that you won’t have to please anyone if you work for yourself, you don’t have much experience with customer service. Businesses need customers, and you will have to keep them happy.

Management Style

Do you have the management style to run your own business? Someone has to see to the details that make any business successful. If you don’t have the eye for detail, find someone who does. This is where many husband/wife combinations find their success. Usually, one person has the financial skills and the other has the people skills to make the business come together. Management skills are crucial to keep the business going.

No Operating Capitol

A good business plan will give you an idea of how much capitol is required to keep your business running. You will have starting costs of course, including the establishment of inventory if necessary and certainly the purchase of any equipment and supplies you need. However, don’t forget to figure in the daily costs of operating a business. Many new business owners fail to consider the costs of utilities and maintenance. Even more difficult is to remember that you will not be receiving a salary, so you will need some kind of salary during that time. If you forget to provide a living for yourself, you won’t be able to keep your business open.

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