May 1, 2008  

A BUSINESS NEWSLETTER from SBA's resource partner. Also at e-news.

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SMALL BUSINESS SURVIVORS PLAN FOR SUCCESS

Fear of failure is an understandable concern that can give even the ablest of prospective entrepreneurs cold feet about starting a new venture.  Those doubts are amplified with every news story heralding the number of failed or closed small businesses

What the numbers say

But a look behind the numbers reveals that small business entrepreneurs have a better chance at success than they may realize.  In fact, a review of business closings by the Wall Street Journal’s Small Business editors shows that the number of outright failures is highly exaggerated.

Nearly a third of business closures that government statistics assume to be failures are not really failures at all. These businesses were considered a success by their owners who simply sold off the pieces or closed them to retire or pursue other activities.

Data from the U.S. Census Bureau’s Business Tracking Series show that about 65 percent of new businesses are still operating after four years. That means new ventures actually succeed more often than not.

But the more resources a new business has to start with, the better its chances. That includes money, of course, but other assets such as market savvy and the right people.

Factors that improve success

Here are four factors that improve the odds of new business survival:

1. People. If you can afford to hire employees, do it. Well-staffed businesses have better survival rates than solo operations.
2. Startup capital of at least $50,000. Not easy, perhaps, but businesses that start with less have higher failure rates.
3. A college degree for the owner. Better yet, enroll in a college-based entrepreneurship program.
4. Home beginnings. To keep costs low, start initial stages of your business from a home office.

Why they fail?

So why do small businesses fail in the first few years?  The most common reasons include competition, mismanagement, high rent and insurance costs, high debt, inability to get financing, loss of clients and difficulty with collections.  Most of these factors can be addressed early on through good research and planning, having a thorough business plan, and getting advice from trusted, objective sources.  Unforeseen and uncontrollable factors that lead to business failure may still arise, but doing your homework will definitely put the odds of success in your favor.

GET FREE HELP to improve your chances of success:

• CEDAR RAPIDS CHAPTER:
  Including Benton, Cedar, Jones & Linn Counties
  Contact SCORE.
  ABSOLUTELY FREE. We help as long as you feel it necessary.
  Call 319-362-6405 ext 2005 or access our ONLINE Counseling at www.scorecr.org .
  
  
• NATIONALLY: www.score.org or call 1-800/634-0245

GREAT READING : http://www.score.org/readingroom.html

SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners.
 

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Brought to you by the Cedar Rapids chapter of SCORE "Counselors to America's Small Business," a nonprofit association and resource partner with the U.S. Small Business Administration. SCORE is dedicated to entrepreneurship and the formation, growth and success of small businesses nationwide. Since 1964, SCORE has helped more than 7.5 million entrepreneurs.

Copyright 2007. SCORE Chapter 227. All rights reserved.

SCORE® Ch. 227 c/o SBA, 2750 First Avenue NE, Ste. 350,
 Cedar Rapids IA 52402-4831
(319) 362-6405 Ext. 2005

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