I have received numerous emails this past week suggesting I cover starting your own business as an option for older adults. With the unemployment rate higher for older adults than for others, and the extra measure of experience and business savvy many older adults would bring to a new start-up business, this may be an option to consider.
Starting a new business typically requires funds. Before you commit your hard-earned retirement money to a new venture, or seek other start-up capital in the form of loans and grants, it is important to recognize that more than 30 percent of new businesses fail in the first two years and almost half fail within the first five years.
These numbers are from a recent study conducted by the Small Business Administration. Prior to this study, it was widely believed that over half of new businesses fail in the first year and up to 90 to 95 percent fail in the first five years. Those numbers were wrong.
Even so, the numbers can be alarming; but over 50 percent of businesses will succeed for at least five years and can offer a nice opportunity for you and your family members far into the future. Simply put, your extra measure of experience and business savvy gained over many years of hard work can be used to bless you, as well as your family, if you want to take the risk.
This week I will cover eight reasons most businesses fail:
- Starting your business in an area where you have little or no true expertise. Many people can come up with great business ideas, but they do not have the expertise to keep the business on track.
- Lack of adequate funding. Most new businesses not only need start-up capital, they may need operating capital to run the business for at least the first year and maybe the first two or three years. Depending on the business model being used, adequate funding can become your biggest obstacle to success.
- Lack of planning. Every new business needs a good business plan that can be used to help seek funds but also to operate the business according to well-identified plans.
- No website. Depending on the business model, most businesses must be represented with a strong website. It adds validity to your business and can be used for marketing purposes.
- Bad location. The old adage, "The top three reasons businesses succeed is location, location, location" remains true.
- Inability to get along with others. Most businesses are built on positive relationships with vendors, employees and customers. Getting along with others is an absolute must.
- Poor management. Strong management, with a clear vision and even clearer goals, as well as having objective measurements in place to ensure your business is moving in the right direction is critically important.
- Wrong business at the wrong time. Many businesses get started without identifying a "unique selling proposition" (which we will discuss next week) and in an area of low demand.
Next week we will discuss the resources that are available to help new businesses succeed. Stay tuned.
Ron Campbell has worked extensively in the job preparation and job search industry. He can be reached at 801-386-1111 or email@example.com.