Why The Rate Of Business Failure Is So High And What Are the Reasons

Why The Rate Of Business Failure Is So High And What Are the Reasons

Many of us go through our life working for another person or business and not pursuing the possibility of working for ourselves and creating an income that will benefit our lives. There are mainly two reasons for this, one is that the person does not understand the business and the other is that they do not have sufficient funds to sustain the business. These are factors that can be learned and funded so there must be another reason for the statistics to say that two thirds of all new businesses fail in the first 5 years of operation.

The numbers are mind-blowing, if we take the USA as an example there are about 700,000 new businesses and franchise ideas started every year. This is a huge amount by any standard and the percentage failure of that is 66% then that means that about 450,000 businesses are failing. The real worry is that if you take into account that any small business has about 3-4 employees this means that another 4 families are affected by the business. This number is then getting huge and over 1 million will be affected by a business failure. These statistics are truly massive so this means that there must be another reason why so many businesses fail in the first 5 years.

There has been a huge increase in the starting of home based businesses and home based franchise opportunities over the past few years. This is because the risks are far less and the cost for setting up is a lot smaller, there are no premises to pay for and added utility bills. The outgoings for a home based franchise are a very attractive proposition for many entrepreneurs and have been a relatively successful option for many people.

Many franchise ideas have come from the internet and there are a vast amount of franchise for sale options available in various sectors. With such a high failure rate associated with new businesses a franchise option is looking like the best way into staring a business as the business model should already be developed and working for you to take over and grow. The amount of entrepreneurs that have gone into this market is growing all of the time as franchise ideas are getting more flexible as the market is highly competitive. This has become a major reason why entrepreneurs have gone into this market, so that they don't loose their creative freedom and possibilities to create other ventures and avenues for profit.

Each franchise for sale offers a different option for each entrepreneur, and it depends on which sector they choose to go into. Most franchise ideas are found and generated through the internet as the possibilities are endless and the target audience is global. These attributes make a franchise for sale option or a home base franchise attractive but you must remember the statistic that two thirds of all businesses fail in the first 5 years.

We have come to the conclusion that support and assistance given to these failing businesses or franchises is considerably below standard. There are people (Entrepreneurs) who are willing to start up a business but the failure rate is so high, that this must mean that the help they receive is not good enough. New businesses are the life-blood of our economy and they must be cared for and appreciated, a major look at the support structure of new businesses has to be addressed by the new governments and resources must be set aside to help these business and franchises.

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