Risk & Business Magazine Cain Insurance Fall 2015 | Page 27

Why Businesses Fail

Odds Are That Many Will Not See Their 10th Anniversary
BY: GARY BELDING, BELDING BUSINESS FINANCING SOLUTIONS

W

hen starting a business, the last
thing you want to imagine is
failure. According to Forbes Magazine, a
whopping 80% of all businesses will crash
and burn. While the statistical sources
vary slightly, only a small percentage will
celebrate their 10th anniversary.
The captions below are just a few of the
key reasons for such failure rates.
Money
It’s no surprise that money is considered
the primary culprit of a business’ failure;
or rather the lack of money. However, the
cracks in the business structure started
well before any financial demise. Some of
these cracks include under-capitalization,
poor decisions, poor planning and
budgeting, over estimating revenue
while under estimating expenses, using
working capital for capital expenditures,
and relying on debt to prop up the
business. It is a sad reality that sometimes
more money can result in more mistakes.
Management
A numbe ȁ