If you are venturing into a new business start up, you may have worries about just how successful your business may be. Any entrepreneur is going to worry over whether or not a new business has a chance at surviving. You cannot be certain at the start up that your business will thrive for the first year, let alone five to 10 years down the road.
The Bureau of Labor and Statistics shows that about 80 percent of new businesses survive for that important first year. That number drops a bit as you head into your second year of business however. Only about 66 percent or two thirds of all new businesses make it through their second year and only about half of all new businesses survive through their fifth year in business. This again, drops to just 30 percent that make it through their 10th year.
These rates have shown to be consistent over the years and the Bureau of Labor and Statistics updates these numbers every year. The percentages however, do not change much from year to year, which means that in your first year of business you have about a 20 percent chance of failing. But, you have an 80 percent chance at success, which is what you should build on.
It is important to understand why these businesses fail. Knowing why most small businesses never make it to their second year can help you to avoid the common pitfalls of other business owners and ensure that your business thrives. Studies show that the most common reason that businesses fail is simply because they lack the funds to continue. Lack of capital affects businesses of all sizes and it is reported that lack of funds is the cause of 82 percent of business failures.
Another reason is that the business is poorly structured. Rushing headfirst into a new business venture may seem like a good idea but you have to know what you are doing. Structuring your business, setting a business plan and following it and ensuring that you have enough funding to keep things running are all important aspects of overall business success. Ignoring just one of these aspects could see you closing your doors long before you are ready to do so. Before you begin your business, it is important that you have a plan in mind. Plan for the first five years and ensure that you include all of the funding that you will need to keep your business going as well as growth projections for your first few years.