Recent studies have shown that whilst there are more businesses being set up in the United States than ever before, a massive 56% of them are set to fail within their first three years. For the 44% which do make it, a further 44% of them will fail before year 5 is out representing worrying statistics for anyone looking to set up their own business.

Whilst there can never be a guarantee of success as a start-up, or any business for that matter, it is important that you understand the failures of the past, to avoid your failure in the future. Today we are going to take a look at some of the factors which have forced businesses to close, so that you can be aware of what to watch out for.

Financial Mismanagement

Just because you have a great business idea does not necessarily make you a financial wizard and many go into business thinking that they can learn on the job. Naturally, once anyone who is not financially minded begins to manage the finances of a business, they fall short and end up making errors which lead to the closure of their company. If finances are your thing then great, if however you struggle to understand how the finances of a company should look, then you need to look into outsourcing or hiring someone who can manage this aspect of the business.


Having a good reputation is important so that you can gain a loyal and trusting client base, equally, avoiding a bad reputation is business critical and this type of reputation can force businesses into closure thanks to the drop in sales that it can bring. Thankfully there a companies your can use like Reputation Management Consultants Eric Schiffer and his team who will work on ensuring that your online reputation stays in tact and that customers can have confidence when it comes to buying your products or services. Don’t ignore your reputation because whilst it can be hard to build, it is very easy to destroy.

Outsourcing Issues

Outsourcing is a very important aspect of your business but failing to do so or doing so at the wrong time, or even too much, can prove highly damaging for your company. Outsourcing must deliver a strong return on your investment, if it doesn’t then you will be throwing money away, something which no business can afford to do. On the same note, failing to outsource when the business is under increased pressure can cause just as many problems and leave your business unable to cope with demand. On the flip-side, business owners try to outsource far too many areas of their business which causes them to hemorrhage money with little return. Ensure that if you are outsourcing that you do it at the right time, in the right amount and more importantly, with the right people in place.