Talk to any entrepreneur about their mood in the early days of planning and starting a business, and you’ll probably hear one common factor: fear.
The fear of failure can both help and hurt entrepreneurs, who are essentially putting a ton of their time and money on the line for their dream. But when you’ve been stagnating as you worry about the dismal business failure rates, or when you’re faltering before your next steps, that fear of failure can really inhibit your growth.
Considering your chances of succeeding—and the path to get there—can help. Let’s take a look at the success rates for the average U.S. business, and what you can do to boost your brand’s chances.
What Are the Odds of Succeeding?
According to the U.S. Small Business Administration (SBA), roughly 70% of all new businesses survive for the first two years. Beyond that, the chances of success fall to about 50% at five years.
As you might expect, making it through the volatile early years can dramatically improve your chances of success. Around 33% of businesses survive for 10 years, and 26% survive for 14 years or more.
These trends, the SBA notes, are relatively stable across industries. And fortunately, even a negative economy has little effect on the survival of your business.
If you’re a new entrepreneur, these figures may sound pretty discouraging. However, it’s important to note that this information captures a huge spectrum of businesses, including those run by teams who are ill-prepared for the project on some level.
In order to increase your chances of success, it’s worth noting why many businesses end up going belly-up.
Why Do Small Businesses Fail?
Running a business isn’t for the faint of heart. Unfortunately, many entrepreneurs run into these four common—but foreseeable—hurdles.
- Poor financing: From funding shortfalls to poor cash flow management, financing problems are the most common reason small businesses fail.
- Poor management: When business owners don’t have the experience or knowledge they need—or at the very least, a support system to back them up—they’re more likely to mismanage their opportunities.
- Poor planning: Before opening their doors, small businesses need a detailed business plan. Failing to address this sets you up for a serious challenge.
- Poor marketing: Entrepreneurs who do a poor job of getting customers through the door will find it much harder to make ends meet.
Armed with insights on common problems entrepreneurs run into, you can find better ways to lead your new brand to success.
For example, hiring someone to help manage your finances may cost money up front, but it can save you from long-term financial issues and even business failure later on. Rather than waiting until “the right moment” to start investing in PR and marketing, make sure you have a buzz around your business from day one. Put an honest effort into creating a business plan, and don’t forget that “overnight success” usually takes months or years to plan out.
At the end of the day, adopting a mindset focused on learning and planning can help you lead your business to success. Consider each step forward with care, invest in the right coaching and support tools, and surround yourself with a like-minded community to get started!