Starting your own business or purchasing a franchise can be an exciting endeavor, but it can also be stressful and challenging. According to the Labor Bureau of Statistics, nearly one in five startup businesses fail within the first year. In 2021, only 80% of startups survived. By Chris Fuller
Starting your own business or purchasing a franchise can be an exciting endeavor, but it can also be stressful and challenging.
According to the Labor Bureau of Statistics, nearly one in five startup businesses fail within the first year. In 2021, only 80% of startups survived.
There are many reasons why a startup or new business may fail. We will discuss a few in this article.
Lack of Research
Many startups fail because of lack of research. The new owners didn’t research the industry, the competition or the market as a whole. When starting a business, you need to research what your customers want and need. How do your customers shop? Is it brick-and-mortar or online? Who is your competition and what are there strengths and weaknesses?
These type of questions can help you better understand your target client and what products to feature, and how much to charge for them.
Poor Marketing Strategy
Having a poor marketing strategy is a sure path to failure. Some startups might not invest enough in marketing or they target the wrong audience. This results in potential customers never hearing about the company. Without customers a business is sure to fail.
Under Capitalization
Lack of funding is one the biggest reasons startups fail. They either run out of money, or they never had enough to begin with.
Many owners of startups are overly optimistic when it comes to their new business, and how much money it will take to successfully launch and get to the stage where it is self-sustainable. They often underestimate the initial startup costs and the amount of working capital it will take to get through the crucial first year. New owners need to plan for unexpected obstacles, if you are operating on a shoe-string budget, you may not be able to weather any unexpected storms. As the saying goes: Failing to plan, is planning to fail.
American Business Credit prides itself on working with new businesses, either through funding franchises as an alternative to SBA funding or providing working capital to new franchises and startups. If you are in need of capital to start or grow your business, contact us today. We are standing by!
Chris Fuller
Chris Fuller has been involved in business finance for over 25 years. Fuller started out in equipment leasing and then founded American Business Credit in 2006. American Business Credit’s core business has been to assist clients in using unsecured funding options to start and grow their small businesses.