The internet has made the process of starting a new business easier than ever. Gone are the huge capital costs of bricks and mortar; marketing is less expensive than ever while markets are no longer the proximity to customers. Cheap shipping has expedited delivery. The loss of traditional jobs has encouraged an entrepreneurial economy. In fact, over 627,000 new businesses open each year according to SBA estimates. With all these factors supporting opening a business, what could possibly go wrong?
The sad fact is that for each business that opens each year, there is an almost equal number that close. These closings come primarily from newly opened ventures with some reports estimating that 80% of all new businesses fail in their first three years.
So, what went wrong? In a 21st Century online economy so much works in favor of new businesses. The answers are both simple and essentially unchanged from the years past. Generally, people who start businesses know their product or service. The inventor of fire rescue equipment knows the product, the pizza maker makes great pizza, BUT what neither of them understands is the capital needed to get through the time before profitability changes the tide of cash going out to income coming in. Secondly, each may lack some key element of expertise – product sourcing, marketing, HR and so many areas of knowledge that are necessary for success. In large companies, experts in each field provide what in a new company may fall on the shoulders of a few people.
The secret of surviving the first three years is to know what you don’t know and to find services that can provide skilled, informed expertise. Dun and Bradstreet did a review of business failures and found that 90% of business failures can be attributed to lack of expertise in one or more aspects of the operation. Without the ability to hire staff experts in each field, the successful startup businessman connects with key business consultants who can fill the gap.
Companies, such as American Verification Processing Services, can help new businesses address both the challenges of finding adequate capital and connecting with the expertise needed for success. Be part of the 20% who find continued success as a new business.