Why Do 95% of Entrepreneurs Fail?
- Category: Business
- Published: Sunday, 27 January 2013 00:24
This article originally published in West Orlando News Online.
Entrepreneurs and owners of small business startups, are very courageous people. They face the massive odds, trying to provide for their families with little real outside support other than family and friends. Generally they have an idea about a product or service or they have what they consider a major improvement on an existing product or service. So they go out and lay themselves bare to the world. They give it all they got, put their heart and soul into their businesses.
Often, their ideas are good ideas, however about 95% will fail within the first 3 to 5 years.
Why do they fail? According to Department of Commerce, new start up companies generally fail because of two main reasons. They lack proper funding and they have insufficient knowledge of running a business. Start ups, especially in our community, seldom have enough funding or the credit worthiness to get the credit needed to last the first year, much less three to five years. This means that if there is a product involved, there will probably not be enough inventory on hand either. Often, even if a start up can scrap up the cash to get started, the wisdom needed in running a business becomes the limiting factor. The new entrepreneur sometimes does not even know how to calculate how much money and product is needed to carry a new company through the first three to five years.
Knowing that the top problems for new companies is lack of funds and lack of business knowledge, the Department of Commerce steps in to provide funding and business education to businesses. This money and education is provided through nonprofit groups whose mission it is to help small businesses succeed. The problem with this setup is that these nonprofit business consultants still can’t secure even a guaranteed loan from a bank on behalf of the startup. The start up has to have been in business three to five years and show a successful track record during that time. Obviously, the start up needs the money and training in order to go into business in the first place so there is a dilemma.
What generally happens at this point is the business entrepreneur tries to start his business without proper funding and business knowledge and subsequently 95% of them fail within three to five years. Some of the remaining 5% that makes it past this point now get the support that they needed 3 to 5 years ago. Chances are, the remaining companies would have been successful anyway.
That means that 95% of the entrepreneurs fail for lack of funding and not enough business education. The government funded nonprofit business consultants have the exact two items that the start ups need, yet the entrepreneurs who need it the most won’t qualify. So the community will lose 95% of the possible new businesses that we could have.
The Henry McKinnon Fund, a non-profit community organization, working with other non-profits and for profit companies, have created a program concept, that will support the 95% that government programs rejects.
Rev. Dr. Henry McKinnon was interested in the youth of the community. The Henry McKinnon Fund original concept was to fund scholarships for youth. The program’s main design is still to support the youth of the community. In the struggle to generate funding, it became apparent that there are larger issues to ponder. Therefore they took a holistic perspective and considered what was of ultimate importance.
They started by working with new and growing neighborhood businesses. The McKinnon Fund strongly supports those neighborhood companies who support the community. They looked at the entrepreneurs and small business owners, the 95% that the non-profit agencies tossed aside, and decided, that is a good place to start.
The congregations of the twenty churches are strongly urged to patronize these new and growing businesses. This will generate income for the entrepreneurs who in turn will give back to the church. The system is designed like a fundraiser but basically is nothing more than community residents supporting community businesses and community churches. The money generated circulates several times exchanging hands before leaving the community. Everyone wins, the church, the local small business and the community. The Henry McKinnon organization will use some of these funds for scholarships and other community projects.
The leadership of over 20 community churches have committed to this concept. This number is growing. What this means is:
1. Local businesses will have a dependable customer base of thousands of new customers.
2. The local church and congregation receives incentives to support local businesses.
3. The Henry McKinnon Fund will have funding to create projects that supports the community.
4. More money stays in the community for a longer period of time generating pride.
5. There is far less dependence on government support.
If you are an entrepreneur or small business owner and want to increase the size of your customer base, or if you just want more information about The Henry McKinnon Fund and this great community program, inbox: https://www.facebook.com/HenryMcKinnonFund . Or call: (407) 615-6785