A business blog isn't for the right way to go for every business. Contrary to…
In most countries (including the US and UK), more than half of newly created enterprises fail within the first five years (business failure statistics according to OECD Entrepreneurship at a Glance Report 2016 and Eurostat).
But what is the primary reason for it? Why does a business fail?
It’s extraordinary how small businesses around the world fail for the same set of reasons.
Knowing the top reasons why businesses fail in advance, or at least sufficiently early, can change how you think and act in your start-up.
In fact it may save your new business from failure.
The quick answer for what percentage of small businesses fail, according to data from the Bureau of Labor Statistics: about 20% fail in their first year, and about 50% of small businesses fail by their fifth year. But it’s also helpful to see this statistic in terms of how many American small businesses survive. According to the Bureau of Labor Statistics’ Business Employment Dynamics, here’s what the survival rate looks like:
For any new entrepreneur, it’s natural to be optimistic. However, whilst being passionate about your product or service is valuable, it often can cloud judgement.
Of course, as an entrepreneur, your world-changing idea is vitally important. Otherwise, what is the point of starting a new company in the first place? But when the idea hits the market you need to adapt and adjust to reality. This is when that plan gets changed if there was one!
Today’s infographic from InsuranceQuotes shows that this entrepreneurial enthusiasm might be misplaced.
The reality is that it’s a cruel world out there for entrepreneurs. The Bureau of Labor Statistics in the United States keeps a sobering tally of how often businesses fail, and here are the numbers from 1995-2015:
The following infographic pinpoints the top six reasons why American businesses fail: