4 Ways to Keep Your New Business From Failing

May 25, 2023

According to the U.S. Small Business Administration, roughly a third of new U.S. businesses fail in their first year, and only half are still in business after five years. Possible reasons for the failure rate include cash flow problems, ineffective marketing, and an entrepreneur’s own fears about succeeding.

“We need to discuss ways to reduce this staggeringly high number,” Michael Wilson, AFFLINK senior vice president of business development, said regarding the topic. “Fortunately, it is doable.”

Wilson offered the following four suggestions to help prevent a business from failing in its first year.

1. Have a business plan. According to the Harvard Business Review, entrepreneurs with a formal strategy are 16% more likely to succeed. Rather than seeing a business plan as a burden, view it instead as a road map to successfully growing and retaining your business.

2. Master money management. Entrepreneurs must focus on how much money is coming in and how much is going out, if they want their company to be successful. From the get-go, they should have a cash reserve of at least three to six months for operating expenses, in order to weather any possible downturns.

3. Monitor employee performance. To properly evaluate employee performance, set clear goals in writing regarding what is expected of each employee in every position. Invest in employee training and development, and conduct regular employee evaluations. These evaluations will further help the owner and management better understand how to monitor employee performance.

4. Keep your eyes on the future. Many new entrepreneurs just focus on daily tasks and putting out fires. Doing so could cause them to miss opportunities.

“We can list other reasons why new businesses fail,” added Wilson. “But invariably, it comes down to a lack of planning. To survive, have a plan and focus on the future.”

Tags

Latest Articles

Timing the College Campus Turnover
July 8, 2025 Marc Tomchin

Timing the College Campus Turnover

July 7, 2025 CMM Staff

How to Stay Relevant in a Hyper-digital World

July 4, 2025

The City Wide Facility Solutions Response Process

Sponsored Articles

Setting a New Standard for Restroom Dispensers
July 3, 2025 Sponsored by SCA TISSUE'S TORK BRAND

Setting a New Standard for Restroom Dispensers

July 3, 2025 Sponsored by SPARTAN CHEMICAL CO.

DfE-Certified Restroom Disinfectant—No PPE Required

July 3, 2025 Sponsored by SOFIDEL AMERICAN CORP

School District Cuts Plumbing Costs With Sofidel

Recent News

Washington D.C.

Major Tax Law Includes Cleaning Industry Priorities

CDC Releases New Recommendations for RSV, Meningococcal Shots

Trump Tries to Eliminate All Climate Change Related Research