Boost Your Odds of Start Up Success
This article is provided by the Greater Scranton Area SCORE chapter.
If you’ve dreamed of business ownership for years, but stories of all the business that failed are stopping you, take heart. There are many ways that you can tilt the odds of success in your favor.
For one thing, the daunting statistics often bandied about that nine of ten new businesses will fail are likely false. A review of business closings by StartupJournal.com, a Dow Jones & Co. division, shows that the number of outright failures is highly exaggerated.
Nearly a third of business closures that government statistics assume to be failures are not really failures at all. These businesses were considered a success by their owners who simply sold off the pieces or closed them to retire or pursue other activities.
Data from the U.S. Census Bureau’s Business Tracking Series show that about 65 percent of new businesses are still operating after four years. That means new ventures actually succeed more often than not.
But the more resources a new business has to start with, the better its chances. That includes money, of course, but other assets such as market savvy and the right people. Here are four factors that improve the odds of new business survival:
1) People. If you can afford to hire employees, do it. Well-staffed businesses have better survival rates than solo operations.
2) Startup capital of at least $50,000. Not easy, perhaps, but businesses that start with less have higher failure rates.
3) A college degree for the owner. Better yet, enroll in a college-based entrepreneurship program.
4) Home beginnings. To keep costs low, start initial stages of your business from a home office.
The most common reasons for failure within the first few years include competition, mismanagement, high rent and insurance costs, high debt, inability to get financing, loss of clients and difficulty with collections. “If you’re ready to take the risk of starting a new enterprise, research your business carefully before taking the plunge,” says Tony Lee of StartupJournal. Even though business failure rates aren’t as high as we think, aspiring entrepreneurs still need to do their homework.
For additional planning help for your small business, contact SCORE “Counselors to America’s Small Business.” SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call (570) 851.1608 or visit www.scorescranton.org to contact the Greater Scranton Area SCORE Chapter.