You’ve probably heard statistics about the rate of business failure for new ventures. It might surprise you to know that the majority of new businesses survive their first year. By five years, though, almost half of new businesses have shuttered their doors.
There are many reasons for this situation, but some of the most common are cash flow issues and running out of cash.
It’s also easy to see why businesses may survive a year or two before disappearing from the scene. Most entrepreneurs are well aware of financial risks in the first few months of business.
By the time you reach five years, you might think businesses are somehow immune to risk. New technologies or the disappearance of a major account can spell trouble.
As you can see, there’s no point in a business’s life where it stops being risky. The best thing entrepreneurs can do is learn to manage financial risk effectively.