Every day new businesses open while others close. Like any new effort, there are a lot of risks that come with starting a business from scratch. There is always the possibility that a new small business will not succeed, but do not be discouraged! Check the numbers before you rule out the chances of your business existing.
According to the U.S. Small Business Administration, there are about 28.8 million small businesses in the United States. These small businesses account for 99.7% of all businesses in the United States. That number is huge! Sounds pretty promising, doesn’t it? Let’s take a look at some of the statistics.
1. More likely to fail sooner
Within the first two years of business, about two-thirds of small businesses made cuts. Over a 5-year period, about half of small businesses persisted and grew. It takes up to 10 years and you have about a third of these businesses that exist. These numbers can tell you one thing: In the first few years, a small business is more likely to fail. If you can overcome those difficult years, you will have a better chance of staying long term.
All Corporate Loans have been broken down in this stunning information graphic:
2 things that will help your business succeed
Why do these businesses fail? Many businesses eventually collapsed because of cash flow problems. It takes a lot of time to run a business and if the money doesn’t come to cover those costs, then you’re going to have a hard time. You also need to keep your budget up to date and make sure that your reports are sorted in the right order. If this is not your thing, then you should invest in an accountant and/or professional book-keeping person. This is a business cost that you can’t afford, especially if you don’t know what the hell you’re doing when it comes to managing your business’s finance!
To narrow down your business’s likelihood of failure, you can make sure you’re well prepared ahead of time. You are required to do market research to see if there is a need for what you are trying to offer. In addition, it is important to identify the potential risks associated with starting the type of business you want. Different types of trading come with different risks. You must have a plan for when those risks arise so that your business does not suffer the consequences.