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.
If you enjoyed the stories on our website, consider subscribing to our Weekly Email Update. We promise not to spam you or try selling you anything. Our editorial content experts are consistently on the lookout for interesting and educational stories.
