Why Do 90% of Home
Based Businesses Fail?
Everyone has dreamed about starting a business and being their own boss
at one time or another in their life. Most who pursue that dream find
only frustration and failure.
Since the mid 80s, as many as 90% of new businesses have closed in their
first year. According to a recent survey of failed business owners,
"lack of planning" was the number one reason listed for new business
failure. Other reasons included were: lack of experience, money, and low
sales.
It may be that most
people just get tired of feeling used and unappreciated at their jobs.
They get their inspiration for entrepreneurship out of frustration. They
see a company that they feel could be operated better, and they make the
decision to go out and try it themselves. They are sometimes shocked at
the overwhelming task of operating and growing a successful business.
From lack of planning, and out of total frustration, they close their
business and return to their employee status.
It's really a shame; there are numerous talented people out there who
could possibly build a better company. But their lack of planning
from the start closes the door on their odds of success, sometimes
before they even open the doors of their new business.
One of the most important calculations when planning a new business,
which most new entrepreneurs grossly underestimate, is their personal
cost of living. They list all the expenses their new business will have,
but they neglect to recognize the total of their everyday personal
expenses. The household bills still show up in the mail box, even though
the chance of showing a profit in new business might take up to three
years.
The number one reason people listed for wanting to be self-employed was,
"I want to work my own hours." The time needed to get a new business up
and running is a main planning issue also underestimated. New business
owners most often need to invest many more hours than they did while
working for someone else. Most new entrepreneurs quickly come to realize
they have committed to more than the normal forty-hour work schedule.
Business owners work an average of sixty hours a week.
Studies show that businesses who do survive longer had more cash up
front to invest. Other survival factors included higher education and
ten years or more previous experience in their field. Age is also a
factor for success. According to a 2002 United States Census Bureau
report, most successful business owners are over the age of thirty-five.
If you are considering starting up a business of your own, do the proper
planning. Research the industry you're interested in. Get yourself
educated about your new business. Avoid taking large loans to fund your
new venture. Instead, keep your business idea in proportion to the
amount of money you have to invest. There's always a way to work out
your idea without exceeding your means.
With as many as 90% of new businesses closing in their first year,
knowing the reasons for those statistics is crucial to starting a
successful business. Being self-employed can be gratifying and
rewarding. With the right planning and niche business, success is
achievable.
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