During our travels we talk to many people who are thinking about or planning to go into business for themselves.  Entrepreneurs drive the US economy and the creativity and dedication of those who start business are the reason why the country enjoys such a vibrant standard of living.

However, most businesses fail within 5 years according to US Census data over the last 30 years.  Why do such a forward thinking group of people, following their own dream rather that working for someone else’s dream, have such a high rate of failure?

I recently met with a person thinking about purchasing an ongoing restaurant/bakery.  He had done some financial modeling and some research on the franchise, but was woefully unprepared to take over such an operation.  In addition to going into a business that has the highest start up failure rate, he:

·         Expected to make a profit in his first year

·         Was prepared to put his life savings into the venture as capital but found it unacceptable to lose any of his investment

·         Did not know if he was prepared to rise at 4:00AM each morning to prepare the bakery for the day

·         Had never worked in a similar business and did not know if he would like it, much less love it.

While these are major red flags, he had never really assessed whether he could had the necessary traits to succeed in his own business. 

When thinking about working for yourself:

·         Are you a planner?

·         Can you take trusted advice?

·         Do you have the physical and emotional strength to handle the strain?

·         At worst case, are you prepared to lose your life savings, live below your current standard of living for several years, and reduce your current salary and earnings on your investment amount in the business in order to follow your dream?

·         Do you really know how much inventory, equipment and working capital you need to open your doors?

·         Do you really know how this business is going to attract customers and make an income sufficient to pay your expenses and give you the income you need?

·         Most important of all, do you have a real passion for this business?  Will it make you happy, even at a lower income rate for a while?

These are just a sample of a myriad of questions you need to answer before you successfully launch your dream.  A B2B CFO can help you navigate these issues.  Contact me at jwilliams@b2bcfo.com or at 757-344-7462 for a free initial consultation.