When you started your business you might have heard the warnings that many businesses don’t make it past the first year. While statistics show that 20% of businesses fail before their first year is up, it’s even scarier to note that half of all businesses fail by year five and 70% fold up within a decade. Those aren’t great odds and it may discourage you from starting that business you’ve always wanted to start, but it’s all about perspective. Remember that many businesses do succeed and failure is always a learning opportunity.
There are five major reasons that businesses fail:
- Competition – when your competition outcompetes you it can destroy your business. This is the case in 19% of business failures.
- Wrong Team – having the wrong team can spell disaster. It’s crucial to choose your employees carefully – the wrong team accounts for 23% of business failures.
- No Cash – running out of cash is responsible for 29% of business failures.
- Wrong Product – pushing the wrong product or being in the wrong market is responsible for 42% of business failures.
- Cash Flow – many businesses have trouble securing business loans or getting paid in tough times – cash flow problems are responsible for 82% of business closures.
Research what kinds of businesses are growing in your area, and if it’s something you feel comfortable with go for it. Healthcare businesses tend to be some of the longest lasting businesses out there, while things like construction and transportation tend to go under more quickly. Food service businesses are often misunderstood and tend to do better than most people think, but they are still difficult to manage. Choosing the right team and setting realistic expectations are some of the most important things you can do to ensure your business lasts. Learn more about how to build your business to last from this infographic!
Infographic Courtesy from Insurance Quotes