According to the US Census in 2018, small businesses have employed 1.9 million people and account for 47.5% of the entire American Workforce. These statistics encourage many of our clients to contemplate new business start ups.
The untold part of that story is that 20% of start ups fail in the first year and almost 60% fail by the fifth year. According to Forbes magazine the following three issues are the primary causes for small business failure:
- No market need. We have seen a dramatic change not only in what consumers buy but also in how they buy products. So, market research is an absolute necessity as step one before any business start up.
- Not enough Capital. 73% of start ups start only with the capital on hand from savings. A majority of start ups have no established banking or lending arrangements for needed capital. And 82% of businesses fail due to insufficient cash flows.
- Not the right team.
Who should be counted as part of your team?
At Carolina BTS, we believe that your team should include outside firms with small business experience and it is important from the very beginning. Even before you officially form your company. In fact, determining the proper business formation for your industry and personal needs is critical and has long-term impact. S Corporations, C Corporations, Limited liability companies, partnerships and sole proprietor companies are among the most popular choices. Make sure you know which is the best choice for you and your new business.
The second cause of business failure is a lack of working capital. Healthy working capital and cash flows depend on strong banking relationships and keeping focus on not only what you make, but what you keep!
So, who is on your team? We have over 40 years of small business experience in a wide variety of industries and business types.