Running a business is not for the faint of heart; entrepreneurship is inherently risky. There are 32,540,953 million small businesses in the U.S., 81% (26,485,532 firms), have no employees.
You’ve probably heard the statistic from the SBA that,”More than 50% of new businesses fail within five years.” But why do businesses fail and what can you do to prevent this from happening to your business?
Over one-third (32.8%) of small business respondents identified “lack of capital” as the #1 reason why the business had to close.
Other factors included strong competition (19.6%), unsustainable growth rate (18.75), and lack of market interest (17.5%) as other factors for business closure.
Only 1% listed COVID as the cause of their business failure.
If you’re dreaming of starting your own business, perhaps the franchise path is a better fit for you. Not to say that franchises don’t fail – they do. I had a friend who owned 8 Dunkin Donuts locations. Half of them closed within a few years of opening. Simply put, they were mismanaged. However, it’s true that overall, franchises have a lower failure rate. Just listen to franchise expert, Kim Daly.
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