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On today’s Business Beat, Jeff discusses the deeper meaning behind small business failure statistics — and what you should do to make sure you don’t become a part of those numbers.
According to data from the Bureau of Labor Statistics as reported by Fundera, approximately 20% of small businesses fail within the first year.
Tune in to the Business Beat, below, to learn more about what entrepreneurs should really take away from small business failure statistics:
“You see, what the statistics don’t tell you is that most businesses fail due to either having a bad idea to begin with or not being prepared as an entrepreneur to meet the challenges ahead or not doing the planning that’s required before starting.”
– Jeff Sloan
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Good morning, Guy!
Look, there’s just no doubt about it: it’s tough being an entrepreneur. And while it’s true that many new businesses unfortunately fail, it’s important to understand the deeper meaning behind the numbers and what you can do to shift the odds of succeeding in your favor.
First, the stats: according to data from the Bureau of Labor Statistics as reported by Fundera, approximately 20% of small businesses fail within the first year.
By the end of the second year, 30% of businesses will have failed. By the end of the fifth, about half will have failed by then. And by the end of a decade, only about 30% of businesses will remain. Now, clearly, if you’re interested in starting a business, there’s no question these statistics may clear that there’s a lot of uncertainty ahead of you, starting with what is your idea of merit?
Can you source the capital you need to support the business? Do you have what it takes to lead the business and make the million right decisions you’re going to have to make? Look, small businesses are a weakest link equation. You can do most everything right, and one wrong move can literally tank your business.
So, what do you do? Before you start a business, research your idea. Beat it up, be objective, be your own best naysayer. Don’t be too emotional, and don’t base your focus study on a data point of one, especially if it’s your mom. Two: equip yourself with knowledge. Make sure you understand as much as you can about the challenges you’ll face before you face them. And number three: plan. Creating a plan before you start the business will force you to think through every aspect of the challenges ahead you’re going to be facing and how you’re going to overcome them.
You see, what the statistics don’t tell you is that most businesses fail due to either having a bad idea to begin with or not being prepared as an entrepreneur to meet the challenges ahead or not doing the planning that’s required before starting. In fact, well over half of the businesses that do fail, fail because one of these three reasons. Do these things before starting a business, and you’ll be likely to succeed. And that is a recipe for small business success.
I’m Jeff Sloan, founder and CEO of StartupNation.com, and that’s today’s Business Beat on the Great Voice of the Great Lakes, WJR.