Not every new small business successfully makes it into a long-lasting company. The reality is that there are a fair number of businesses that end up failing. A recent InsuranceQuotes infographic indicates that only around half of small companies survive the first five years of being in business.
Now, the question of what causes a business to fail is a complex one. As every company is unique, so too is every business demise. Also, there can be a lot of different interconnected factors behind a business failing. However, there are some common themes that show up in a fair number of business non-success stories. Among the things that are common contributors to small business failures, according to the InsuranceQuotes infographic, are cash flow difficulties, company products and services not matching up well with consumer needs and demand, running out of funds, failing to have the right team and being out-competed.
Now, the possibility of their business one day failing may be one of the last things an entrepreneur wants to think about as they are starting a new company. However, giving this topic some thought can have value. For one, thinking about what things could potentially lead to their business failing in the future could provide some important insights to a startup owner. It could give them insights on what sorts of steps they may want to take during the startup process aimed at helping their company avoid those sorts of pitfalls. Also, they may want to give some thought to what things they could do to make it so, if the company were to fail, the process of bringing the company to a close would go relatively smoothly and predictably.
Skilled attorneys can help startup owners with incorporating concerns and goals they have regarding their company’s future into their approach to the legal matters involved in the startup process.
Source: Business Insider, “Here’s why small businesses fail,” Jeff Dejardins, Aug. 2, 2017