Starting a Business
A blog for
businesses with 20 or fewer employees or for people planning on starting one.
There are two threads. One for Starting a Business and a second for Growing a
Business. Author: Henry McCabe.
Assessing your readiness.
The third
question a nascent business person must answer is: Am I willing to take the risk inherent in
starting a business? As can be seen from the graph below, half of businesses started are
no longer operating after five years. That does not mean that 50% of the businesses
had a dramatic end through liquidation in bankruptcy. Many quietly close the
doors because the business did not meet
the founder's personal cash flow requirements. Often at the end of an initial lease term or other commitment when the owner concluded that it was not worth soldiering
on. Some are acquired or merge with other business or are sold and continue to
operate under another name. Still, the odds are against a start up being a long
term successful business. In these cases the founder risked, and lost, his
investment of cash and something even more valuable- years spent during which
he could have earned income working in somebody else's business.
That is the
bad news. The good news is that 16 years
after starting 25% of the businesses started were still going. There is a high probability
that the owners of those businesses had
years of high earnings and are getting ready to sell off, or pass on, a
valuable asset. They looked at the risk
of failure (one hopes), decided to take the chance and won the prize.
Think about this question- Am I willing to risk my money and months or years of my
life in the face of these odds? And another very important question- If I do
decide to go ahead, is there a way I can minimize the risk?
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