Why Do Most Businesses Fail?

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According to the US Census Bureau, 5,044,748 businesses were started in 2022, but the common trend suggests that only 22% will likely make it past their first year. And 50% of those will fail within the next five years. Why is this? Primarily, poor management. Most people who start a business have little to no entrepreneurship experience, and they do not perform adequate planning and research before taking the plunge. They also do not realize that it can take years to realize a profit, leading to problems with cash flow. There is also the possibility that the product they believe in has no real demand, leading to low sales, especially if they do not have an effective marketing strategy. Most devastating to a business is a lack of effective leadership. If management is not willing to adapt and persevere against failure, how will the business truly flourish? Financial controllership is also an essential aspect of growing a business during the startup phase. If you need help in developing a viable business plan, we would love to help you. Give us a call at 832-295-3353!