Why Startups Fail And How To Avoid It

No matter how many hopes and dreams startups are built upon, most will have closed their doors within a few years. We identified reasons why American and Canadian businesses fail so often and how to avoid them with the help of a specialized start-up consulting agency such as STS.

Why Small Businesses are Taking It a Year at a Time

A small business is defined by the Small Business Administration (SBA) as one with 500 employees or less. That includes 99% of American and Canadian companies. Out of that large demographic, 21.5% fail in less than a year. 30% fail in the second year, 50% in the fifth, and 70% in the tenth. Only 25% make it to the 15th. 40% make a profit, and 30% break even.

66% of businesses experience potential failure within the first 25 months. There is a multitude of ways establishments can tank while they are young:

• We don’t have to remind you of COVID-19. It led to 77% of failures last year.
• The most common reason for a startup’s demise is that there aren't enough employees, usually 11-50. When employees and owners are spread too thin, crucial things get missed.
• The quality of leadership is going to make or break your team. If a founder cannot motivate or keep their employees, all the work and stress fall on them. Also, more time and money is expended, unplanned for, re-hiring and re-training.
• Make sure not to lack expertise or passion because that will run your business into the ground. You will need to solve a problem or sell a dream to get your first customers on board. “I want to make a lot of money,” will not cut it. 
• Frequently failure is due to poor marketing or lack thereof. If you cannot reach those who would buy your product, you cannot launch.
• If there are no consumers of what you are offering, a startup will not get off the ground. Careful market research in the business planning stage is essential.
• Without a business plan, a budget, and enough financing when necessary, it is too easy to run out of money.

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Save Your Business With Consulting

The stats are staggering, but our proven Start-up to Success consulting process is the light at the end of the tunnel. It’s an excellent time to start a business, as long as you give yourself a chance with the right resources. Our consulting provides you with a solid foundation to grow your establishment with added assurance insurance. So consider us your hand to hold around every corner.

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No matter how long or short you have already been in business; we will take a look at your business plan and identify the missing pieces before it’s too late. We then help you plan and execute a marketing and growth strategy that fits within your budget. But most of all, we will not leave your side while you make it happen as long as you abide by our three requirements for consulting: be committed, be courteous, and be ethical.

It’s a shame that the majority of small companies die out, but they don’t have to, and we want to help. Our agency was born out of the idea that entrepreneurship is the answer to problems that only can be solved by oneself when there are no other ways out. A successful startup can impact the lives of those involved for generations to come. Congratulations on the long-lasting success of your business!

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Isabella LeClaire
Researcher, Writer, Marketing Assistant