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Why Businesses Fail the First Year

Store ClosingThe economy is forcing many to seriously look at going into business by themselves. There are many ways to make money with a business, and working for yourself allows you to set your own hours. It is important to do your research, however, because most businesses fail after the first year. This is a statistic that has not changed, and it should.

Businesses that fail within the first year, or any time after that, could have had any number of things go wrong. If you have accounting issues, strategies that were flawed, or if any small unplanned situation arises, you may have your business go under. If you are prepared both mentally and physically for any situation, then you have a better chance of weathering the market.

When planning to start your own business, you will want to make sure you are completely prepared. There are three areas to make sure you have set up and understand. Those areas are:

  • Consider Requirements Business Ownership
  • Business Plan
  • Financing

Considerations Made to Business Ownership Requirements

Being a business owner is not a walk in the park. There is a lot of work that is required, and complete dedication will be needed. If you are not a person who is normally self-motivated, then it will be hard to make your business succeed. Something that many people do not consider, and should, when starting a business, is their personal health. Customers and clients are not going to care if you have a flair up with fibromyalgia, or if you have a bout of depression. The market is extremely cruel and if you are not strong enough to handle it, do not get started. If you believe your business is needed, then see if you can find someone to go into business with you. This will allow someone to handle the company if you are not well.

Business Plan

Before starting any project, you will want to have a plan. This is true of writing articles, beginning housework, or starting a business. You need to look at the following things and plan for them.

  1. What business will you be running?
  2. What services or goods will you offer?
  3. How much will the services or goods cost you (figure in taxes and shipping costs)
  4. How much will you charge your customers?
  5. What is the competition charging?

The other part of planning your business is looking into the future. Think about where you want your company in five to ten years. Make sure when you write your plan that you write down HOW you plan to get to your long-term goals.

Financing

The final part of starting a business is how you plan to finance the business. A business may not start making great returns for the first or second year. When you are looking at a business loan, you will want to make sure that it can help you through those first couple of years. It may be a good idea to spend a year making sure you obtain any and all financing you can before you officially open your doors. 

Businesses will fail, that is a fact. Do not let it be because you have not planned any trial that may arise. If you have something that is being demanded, then you will not fail unless you have not considered whether you can handle being a business owner, have a plan written out, and have all the financing covered.

Posted in: Business Start Up

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