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Home  > Article

Why Many Businesses Fail Within the First Six Months

By S. Ann, courtesy of Associated Content
Associated Content

A lot of businesses start out with great hopes--only to fold before the end of their sixth month of operations.

According to studies, a lot of start-up businesses never really succeed because of lack of capital, lack of proper systems and lack of staying power on the part of the entrepreneur.

Usually, small businesses start on a shoestring budget. Money is hard to come by. Financial institutions often resist lending money much money to a start-up entrepreneur because since he or she still does not have the track record to back his or her business assumptions. More often than not, entrepreneurs have to operate using whatever personal savings they have and whatever money they are able to borrow form family and friends. When the initial funds of the business run out, it will be nearly impossible for the entrepreneur to generate more funds to keep his or her business going.

The sixth month is the deciding point as to whether or not the entrepreneur will go ahead and brave the odds, or cut losses and fold. By this time, the entrepreneur can establish a kind of trend in terms of the sales of his or her goods and services. Six months is usually the benchmark when it comes to determining whether there are any improvements in terms of sales, especially if the entrepreneur has limited capital.

On the other hand, during the first six months of business operations, the entrepreneur is expected to set up a lot of systems to get his or her business up and running. Note that when you are engaged in a business, you don't just produce things or offer services; you also need to create a system so that your business will run smoothly. In the event that the entrepreneur fails to set up everything during the first 6 months, he or she will have problems in terms of business operations. In some instances, the entrepreneur may be so overwhelmed with backlogs in paperwork that he or she might decide to save him/herself the trouble by closing down shop.

This article was reprinted with permission from Associated Content, The People's Media Company. Visit today to publish your own content and explore AC's growing multimedia library.

© 2008 Associated Content, Inc.

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