start a business

Why don’t more people start a business?

In the USA, many people do regularly start a business. It fluctuates but over 200,000 new companies are registered with the secretary of States each month.

The bulk of job creation in the US comes from small businesses contributing to approximately 60 percent of the net new jobs. Small firms in the 20-499, employee category typically lead job creation. There are approximately 28 million small businesses in the United States. Establishing a business and realizing a dream is obviously a rewarding and liberating experience, but unfortunately, one that doesn’t last very often.

How Many People, who Start a Business succeed

According to the SBA’s Office of Advocacy: “About half of all new establishments survive five years or more and about one-third survive 10 years or more.” Five years of sweat, money, and hope vanishes for at least 1 out of 2 business start-ups and thereafter a similar amount fails in the following years. Accountants will tell you the actual figure is much higher. Most start-up businesses never make it to the stage where they register with local authorities, so their statistics aren’t recorded. The odds are stacked against entrepreneurs. It’s the journey and not the destination that counts – Trying and failing is part of the journey to success, Right?

The goal is to be in the ranks of business owners that make it on the first attempt, but not many do. The good news is their chances improve on following attempts. Founders of a previously successful business have a 30 percent chance of success with their next venture, founders who have failed at a prior business have a 20 percent chance of succeeding versus an 18 percent chance of success for first-time entrepreneurs. Don’t give up, just be smarter, use your experiences as fuel.

Why do People, who Start a Business Fail?

Obviously, each business failure may happen for a specific reason, but often multiple. It’s possible the entrepreneur was doomed to fail, without the talent for the job. They run out of money with no access to working capital, the market changes, supply chains fail, lack leadership or unforeseen regulation changes impact profitability. Every venture is not the same, each business has its own unique set of variables-the skills, knowledge, and experience of the founding entrepreneurs, how established the product and market is. When starting, there are so many unknowns to deal with from name, logo, which phone carrier, website, marketing, supply chain…

The reality is there are only two questions to be focused on answering and directing energy towards solving.

– Are there enough people out there who will buy the product or service at a profit?

– Does the business have enough cash (capital) to cover costs until they are found?

Challenged Beginnings

Most new startup operations are initially funded through the founders' personal finances. Capital from the owners’ personal savings, credit cards and other personal debt, retirement rollovers, and investments accounts are used. Founders, feverishly pursue sales revenue, pressing to win enough clients to support their venture before funds run out.

On average it takes a business 2, to 3 years to reach viability. Significantly undercapitalized from inception, starting with only a 3rd of the capital needed is a recipe for failure, and there are lots of ways to fail, lurking around every corner.

Start-up Business Statistics:

Business Statistics Financing (Small Business Trends, SBA)

– The vast majority of startup funds (82 percent) come from the entrepreneur themselves, or family and friends.

– 77 percent of small businesses rely on personal savings for their initial funds.

– 40 percent of small businesses are profitable, 30 percent break even and 30 percent are continually losing money.


What’s it all about Alfie?

Within 5 years of starting, 50% of small businesses are gone. When a business fails it often takes the owners personal savings, credit, assets, and many valued relationships with it. Most of the small businesses that survive past year 5 have created a long hour low paying job for themselves where their business has less than $100,000 in annual owner’s discretionary cash flow, and if sold not worth a great deal. Only a small %, of business owners, create a business value of $500,000 or more and have at least $125,000 in owners’ discretionary cash flow.

– Having two founders, rather than one, significantly increases your odds of success as you’ll:

  • Raise 30 percent more money
  • Have almost 3X the user growth, and
  • Are 19 percent less likely to scale prematurely

– 82 percent of businesses that fail do so because of cash flow problems

A lot of entrepreneurs attempt to start a business by bootstrapping, stretching resources-both financial and otherwise, as far as they can. Regardless of how much capital you begin with, its the effective use of whatever capital you have that drives results and ultimately, success or failure. It is worth noting, taking steps early on in a venture to build business credit, separate from personal credit can have a resounding impact on liquidity and the ability to progressively access affordable capital throughout your business journey.

3 years ago, we started out as a commercial finance company, intending to provide funding solutions to the capital-starved SME communities. Soon after inception, we recognized, to deliver on our purpose, and help more businesses succeed we would need to do more, a lot more. We adapted to develop a broader value chain, beyond just business funding - to combat causes of failure, deliver growth and performance solutions, and drive more business success. Our own business survival and growth has been and continues to be underpinned by many of the solutions offered through the business success platform.

During the first 3 years, our business model rapidly evolved, and much by necessity. How to start, grow, and sustain a business is always evolving - Being aware of the changing environment was essential to us - How to take advantage of change was and is critical.

Business Building Blocks

The basic precepts for building a successful business are no different. We believe 6 key building blocks are foundational and common to most successful businesses; Appropriate capital, talent, structure/organization, purpose, networking, and of course planning, which is the first step to being appropriately capitalized.

Planning is a core discipline to achieve success. Developing a road-map to meet business goals including budgets, timeline, what is the average contract value per customer? how do you plan to acquire customers? what is the cost of customer acquisition and length of time on average to acquire? Plan, run, review and revise, to fine tune results.

It costs around 5 times less to keep a client than to acquire a new one. Listen to clients to help ensure quality customer service, for higher client retention and to drive direction. Maintain client relationship management systems to seamlessly merge marketing, sales, and client service. Explore multi-channel marketing strategies - digital, inbound, outbound, events, social media, emailing, mailer, networking to determine how best to reach your audience and keep them loyal. Keep ahead by tracking key performance indicators, and tweaking behaviors to maintain and or improve results. KPIs; costs quality, timeliness, customer satisfaction and staff motivation all impacts and drive the 3 numbers that help define and maintain business health - sales, spend and cash flow.

Business Stages

We believe a business can progress through 7 distinct, and fluid stages; From startup to viability, growth, and various levels leading to and from sustainable success, or failure. Sustainable success is characterized by an agile and highly functioning business. Resources are effectively used to deliver predictable results. Each stage has identifiable hurdles, but many common to business type or industry. To navigate each stage and steer towards, or maintain business success, requires varying degrees of emphasis and focus on the precepts. The structure or organization that works for a start-up does not necessarily apply or work as the company chooses to grow. The skill-sets or talents necessary to lead a larger enterprise are different to the flatter structure in an early stage company.

What has changed?

Digital Transformation is impacting How to Start and run a successful Business

As the title above suggests. It is the framework in which a business operates that’s dramatically changed over the past 10-years and continues to.

How consumers and businesses decide to buy, and from where. The exponential technologies businesses use to compete, and the lightning speed at which they are evolving - Big Data, Cloud, AI, Machine Learning, Block-Chain, Augmented Reality technologies - We are in the midst of a 4th Industrial revolution driven by digitization, profoundly impacting all industries, economies, and disciplines.

Digital has transformed business resource capabilities and the resulting possibilities. Lowering the costs of managing a business across all disciplines from financials, purchasing, inventory, sales, and customer relationships to project management, operations, and HR.

Rapid deployment of proven cloud solutions helps ensure a company has a single source of data truth across the whole business. Immediate adoption of value-adding functionality allows for more time to focus on the business not implementing software.  Actionable intelligence enables quality decision making throughout the firm and can empower, motivate and help the most important resources, the people.  Not complex, solutions help with;

– Profitability

– Cost reduction

– Improve reputation

– Develop new revenue streams

– Accelerate growth

Digital transformation and agility are essential to compete

To succeed in an increasingly digital economy, you need to constantly create value from the latest innovations to meet changing customer expectations and fierce competition. Businesses, even the small mom, and pop ones, who adapt and embrace digital, can compete without complexity, or prohibitive costs to grow businesses their way.

Keeping up with it all is a challenge, but the changes drive opportunities, which is exciting and exhilarating. The opportunities abound for people that want to take the leap of faith, leave their corporate world to start on their own. Stay thirsty my friends. 

The world is changing faster and to survive so must a business

By 2020;

– The average person will have more conversations with bots than with their spouse (1)

– 100 million consumers will shop in augmented reality (1)

– 85% of a customer brand experience will occur without any human interaction(2)

– Over 80% of the G500 will be digital services suppliers through industry collaborative cloud platforms (3)

– By 2030, organs will be biologically printed on demand (4)



(1) Gartner, Top Strategic Predictions for 2017 and Beyond: Surviving the Storm Winds of Digital Disruption Oct, 2016(2) Centric Digital, How Omni-Channel Customer Experiences Drive Brand Transformation Oct, 2015 (3) World Economic Forum, Healthcare in 2030: Goodbye hospital, hello home-spital Nov, 2016(4) IDC Research, Inc. Nov, 2016