Startup Firm

5 Key Risks Critical To Success of New Companies

The First Few Steps In the Right Direction

Reality Check

5 Questions

Independent or Family-Owned Restaurants

The failure rate for independent restaurants can be as high as 60 percent. The failure rates of restaurants are typically high because most restaurant owners are skilled in their profession and not necessarily business. An owner’s business ability to raise capital are key factors in deciding whether a business will be successful or not. Restaurants also fail without proper marketing strategies or high traffic locations. Businesses who aren't a household name may have difficulty capturing market share without proper visibility.

Direct sales also have a higher than average failure rate than other small businesses. Examples of direct sales include companies such as Pampered Chef or Amway. People who participate in these businesses are not required to find significant start-up capital. A small investment is required before business owners can sell.

Many business owners fail in direct sales because they start their businesses for money instead of passion. Business owners in direct sales must have exceptional sales ability, stamina and drive to succeed. Without proper training, business owners become frustrated and may not dedicate the time and effort into the business. Improper training and lack of motivation leads to failure.

Consultants and coaches often fail because there are no standards in the field. Many companies are reticent to hire coaches and consultants because they cannot prove their ability through licenses or other documentation. Consultants must demonstrate through portfolios they can perform the work as specified. Inexperienced consultants rarely have a chance to succeed. When consultants are not adequately prepared, they may become frustrated trying to land contracts or competing with other consultants in the field.