Statistics show that 8 out of 10 new businesses (i.e. 80 percent) fail within the first 3-5 years. Poor management, lack of planning, insufficient capital are few of the reasons.
Often they fail because the owners don't know anything about running a business.
They may be experts in the TYPE of business they have, e.g., a great chef may open a restaurant, a great athlete may open a sporting goods store, a great fashion designer may open a clothing store.
But they know nothing about running a BUSINESS.
I find that business owners don't make it because they:
--somehow think that passion will get them through everything,
--listen to people who have no right to give them advice,
--are too emotionally attached to their business,
--try to do everything themselves
-- they haven't yet moved from being self-employed to running a business -- because they don't know what they don't know.
Marketing wise, most don't understand that "less IS more, when it comes to creating an ideal client profile." They market to "everyone who breaths and make no one special. And we as clients want to feel special.
The bottom line is that the principal reason for failure is ...
Lack of a sound business plan. It is just as much for the business planner as for the investor.
What's the best measure to protect yourself?
Completing the business planning process will convince the most important individual that a viable business vision exists for the enterprise. That individual is the owner.
When the owner has completed a business plan, he or she will be able to pitch it with confidence to people who can help. It will be the road map to a business future that you can slide across the table to a banker, partner or investor. The owner can address it with verve because he or she owns it by having done it.
These links provide free tools and examples on business planning as well as free counselors to assist, worldwide.
How To Write A Business Plan
Sample Business Plans