In the U.S., it's estimated that less than 40 percent of all startups are still in business after five years. This doesn't mean that over 60 percent have failed, since some owners will sell or close their successful businesses. Nevertheless, the better you prepare yourself and understand the challenges ahead of you, the more likely it is that your business will succeed.
Probably the two most common reasons that a business doesn't succeed are that (1) the business is poorly managed because the owner lacks the necessary skills and (2) the owner underestimates how much money it will take to start the business (known in the lexicon as "undercapitalization"). In this section, we'll look specifically at the first cause and try to help you determine if you have the necessary skills.
To begin the process of preparing yourself, let's take a look at:
- Pros and cons of owning a business— here's where you can get a good sense of the challenges — and the rewards — of owning your own business.
- Roles you'll be expected to play— how many hats must you wear as a small business owner? Are you ready to be one of Uncle Sam's sales tax collectors? Are you ready to "manage" your customers? Are you ready to be the boss?