It is truly a difficult task to run a successful business no matter what industry you operate in. A successful business operation that is able to sustain its success over the long term is rarer than you might think. Several research statistics show that roughly half of all businesses survive five years and only a third survive ten years or more. What becomes of the other half and two thirds that don’t last to these five and ten year milestones? They fall by the wayside. Why do they fail? There may be various reasons in each case but generally there are several pitfalls that these business operations tend to fall prey to.
One such pitfall is the premise for starting your business; if you start your business simply because you want to make a lot of money or because you think that doing so will provide more time to spend with family, then you should probably reconsider your motives. The honest truth is generally that the business will demand much more of your time than you had anticipated and it may or may not be as profitable as you envisioned, especially at first. A business should be initiated for reasons such as a passion or love for what you will be doing as well as an educated and well-thought-out product or service that would fill a legitimate need in society. A successful business owner will learn from mistakes and will forge through difficult times. He or she will also exhibit traits of integrity and honesty on a consistent basis.
Another cause of business failure is poor management or lack of understanding and expertise within management. A business owner must recognize the areas they lack in and seek help sooner than later. Consistent attention to the logistics of the business must be given.
Still another cause of business failure is lack of sufficient capital to sustain the business until revenue from operations can sustain the operation. It can take 1-2 years for many businesses to reach the point of self-sustainability. There must be adequate capital from the owner or other source to keep the entity moving until that point is reached.
A few other pitfalls that sometimes play into the success or failure of a new business are inadequate planning, growing too fast, lack of or an inadequate website and choosing a bad location to establish your business. Each of these factors can have positive or negative effects on a new business. Too many negative factors can sink a ship that at one time appeared destined for success.
At Weech Financial, our goal for our business-owner clients is to help provide them with the planning and execution that will make their new business successful. We help clients choose the proper business entity structure that allows adequate legal protection as well as the most efficient tax operation. We focus on more than tax efficiency, however – we focus on improving the overall bottom line of the company and its long-term sustainability.
If you are considering starting a new business venture or have questions regarding your existing business, please contact us to schedule an appointment to analyze your operation or planned operation. We would love to assist you in making appropriate decisions on whether to move forward with the new business and, if so, how best to set up the new business. We can also provide the ongoing financial feedback needed to make wise business decisions going forward in the form of monthly financial statements and reports.