As per the data revealed by the United States Bureau of Labor Statistics, almost twenty percent of new startups are not able to sustain themselves and eventually fail. Skynova, an online invoicing company, surveyed 492 startup owners in the third quarter of 2022. The data collected from the survey highlights major factors that can lead to the crash of a new business.
Low investment and lack of financial support are the single biggest factors leading to failure. This accounts for almost 47 percent of the business failures observed last year. The figures have doubled since 2021.
The ongoing inflation crisis in the United States (and globablly) is causing major problems, such as running short of cash to stabilize a business. Not just economic conditions but improper planning can also contribute to failure. Unfortunately, it is expected that the economic crisis will continue to be an important factor in 2023 as well.
The COVID-19 pandemic caused damage to most businesses. Even the bulls couldn’t save themselves from the damage, and small businesses were either forced to shut down or suffered great damage, leading to failure. However, with things going back to normal, the failure rate due to the pandemic began to decline as well. From fifty-nine percent in 2021 to thirty-three percent in 2022, the figures dropped.
Even after keeping all the factors under control, it still cannot be predicted whether the new startups will crash or cash. However, those founders who were able to make their new business work had several suggestions for newcomers. Upon being questioned by Skynova, what would the founders do differently if they had the opportunity to do so at the beginning? In response to this, fifty-eight percent of the founders said that they would have done a more thorough market analysis as well as proper planning for the business.
When these founders were asked to share the most important advice for new founders, almost 79 percent of them suggested that they should learn more from their mistakes. In addition to this, 75 percent said that changing businesses based on the conditions can help them grow as they can avoid total failure. Whereas, failing to change the path on time can lead to a fall.
Kevin O’Leary, a well-known investor from Shark Tank, shared his views. According to Kevin, those who refuse to change when it is important are the ones who will only listen to themselves. Refusing to update can lead to failure.
Read next: Americans Have Less Working Hours But Their Pay Is Higher than The Poor Countries in Which Workers Have Long Working Hours
by Arooj Ahmed via Digital Information World
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