Fifty Percent of Startups Fail

Startups

The majority of start-ups go out of business within five years and two thirds are no longer operating ten years after being formed. Most failures are attributable to the following six reasons.

 

 

 Inadequate Planning

leading to

Not Enough Sales or Poor Execution

coupled with

Insufficient Capital

overseen by

Unfocused Management

with an absence of

Rock Solid Accounting

And a failure to engage

Professional Advisors

 

Some start-ups fail because of factors beyond their control. But responsibility for much of the high failure rate of startups lies mostly with the entrepreneurs themselves.

For example, research shows that writing a business plan, having sufficient upfront capital and putting in place financial controls will significantly increase your odds of survival.   Yet too many startups fail to do these basic things. Even poorly run companies can survive for a time if their sales are greater than their cost. This is basic math, but many startsups fail to get their products to market soon enough or cannot sell their product or service at a high enough markups to support their operation.

The reality is that almost 1 out of every 4 startups fails during the first year. The good news is that failure rates drop significantly over the years: 24% to 10% to 7% to 5% to 4%.  This is an indication that the most critical period of any company’s life is its first year (or two) of operation.

This high failure rate should not deter you. Starting a business is not rocket science. However, be aware that if you chose to ignore the basics – you will have a higher likelihood of failure.

So, my advice is to do your homework (plan appropriately), have discipline (follow the plan), watch your spending and stay focused on your objective.

Following these simple recommendations will greatly enhance your likelihood of success.  Good luck building your dream enterprise.

 

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