What Can Cause A Great Start-up To Fail?

According to statistics published by the Small Business Administration (SBA), about half of all employer establishments survive at least five years and a third survive ten years or more.

This is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years.

Notwithstanding, the fact is a significant percentage of new businesses fail each year.

Needless to say, there are numerous views posited in the public sphere and mass media regarding the reasons for the failure of so many start-up businesses.

Some of the more compelling arguments put forward are:

1) Lack of capital

Businesses can experience a number of money related issues in its embryonic stages. The truth is it may take several years before a business show any sign of profit.

Therefore, entrepreneur must not only have the capital to start the business, but also money to keep the business going in its difficult start-up phase.

2) Lack of management skills

Many entrepreneurs may have the technical skills required in a business but do not have the knowledge to run a business.

The fact is it takes more that technical ability to get a company off and running. It takes money, time, people, and inventory, among other factors that all need to be managed effectively and efficiently if a small business is to reap any form of success.

3) Failure to manage success

It is said that success breeds success, but the irony is success can also kills success.

Fast growth can often results in dramatic changes in a business.

Entrepreneurs often make the mistake of business overexpansion or expanding too quickly. This may send the business into a tail spin if no strategy or proper planning is in place to deal with some of the vagaries of the market place.

4) Market ignorance

Many entrepreneurs misread the market by thinking that consumers will buy into a product that they love and design rather than what the consumer needs.

This is not only a blindsided approach, but one that lends to a scatter shot strategy that only serves to waste limited resources.

Entrepreneurs would do well to first think about the needs of consumers and seek out products that satisfy those needs.

After all, people are looking for solutions and will undoubtedly buy any products that solve their problems.