Starting a business is obviously more difficult than most people think since this process needs lots of effort to keep the company in tune with the niche. In reality, the quantity of start-up businesses that failed is uncountable, but why and how many of them actually do fail? Before diving into the reasons, let’s clarify something you should know to start your own business!
How Many New Businesses Fail?
According to the Small Business Administration (SBA), a small business is defined as a separate business that has 500 employees or fewer. That means the business size is determined by the number of employees, and thus, some companies are technically smaller than their appearance. The State Profiles 2022 of SBA also point out that these 31.7 million small businesses make up for 99.9% of all US businesses. Although there are many companies that start up every month, the failure rate is still over the top. In compliance with the Bureau of Labor Statistics, 18% of startups fail in their first year, 50% after five years, and 65% by the tenth year, which proves the path of startuppers isn’t easy at all.
Anyway, why is the percentage of failed startup companies so high?
How Many New Businesses Fail?
Reasons for Failing
There are some popular reasons for these businesses failed:
- Money Ran Out: Although doesn’t clearly explain why a business failed, this reason is still a common reason that leads to the failed business. Money running out relates to poorly managed costs, an inability to obtain financing or further financing needed to sustain a business,…
- Wrong Market: One of the common reasons is that their target audience is too broad: everyone, everyone in their town,… This just doesn’t work out well. The more narrow and detailed your niche is, the easier it takes to market to the right audience.
- Lack of Research: Although research is one of the most important steps that every business needs to conduct, it is still neglected by entrepreneurs as they mistakenly think that they have a great service or product that can meet all demands of customers. By researching your market deeply and clearly, you will know exactly how to satisfy your potential customers’ needs.
- Bad Marketing: It is sad that most entrepreneurs focus only on their craft and spend little care on marketing activities and thus, can not bring the services or products to the target customers.
- Not an expert: Too many entrepreneurs start their business not because they have skills and expertise, but because they need a job and want to have their own company. Since their idea of business is too vague and lacks specialized knowledge, these entrepreneurs are destined to struggle in their business path.
How to avoid failing
To answer the question of how to avoid falling, some key points are proposed to prolong your business life:
- Set Goals: Know exactly what you want to earn, where you need to be, and where you want to be. Having detailed goals will orientate and motivate your business activities.
- Research: Research your market and your customers, of course, as much as you can. The more you know, the more you can interact with and offer them true value.
- Love Your Work: Love what you do. Be passionate about your business and you will be motivated to complete every challenge.
- Don’t Quit: No matter how great of a business you have, there will always be downtimes, this way or that way. Anyway, don’t quit, try a little more. This is a time to put in extra hours, press harder, and make everything work!
How to avoid failing
One of the particular examples, Louis Aronne and his partner, James Baker, started a tote bag business together named Hank The Square LLC in 2014. After three years of striving in a market with a really low rate of profit, they decided to extend the business category that includes print sweatshirts, print T-Shirts, yoga mats, and cushions,… By attending this clothing and accessory industry with clearer research about customers, Louis and James have proven their love of jobs and their perseverance in following their dream. Meet Hank (Hank The Square) also steadily develops with the various and trending products, trying to be a destination where you can experience something truly unique.
Conclusion
Obviously, starting a business has a ton of risks and many startups fail within the early years, but it’s still worth trying. If you want to be a startupper, don’t forget to follow these tips above and be well-prepared for any circumstance that may happen.
