It’s no secret that the odds of startup failure are high. According to a report by CB Insights, 90% of startups fail within the first 18 months and 97% fail within five years. When you start running a company, it’s easy to feel like you’re invincible, but the reality is that there are many risks associated with starting a business and even more ways for things to go wrong. It can be difficult to predict how those problems might arise or how they will affect your business – which is why it’s important to plan ahead when it comes to protecting your finances:
Know your success rate.
Before you start your business, it’s important to know your failure rate. You might be surprised at how high it is.
A study by Portland State University found that only 2% of tech startups make it past the five year mark and only 1% make it past 10 years. And these numbers are even worse for first time entrepreneurs who have no funding or experience running a company: they have an 80% chance of failure within 3 years!
If these numbers scare you–and they should–you need to plan accordingly by saving money so that if your business doesn’t succeed, you’ll still be able to pay rent and put food on the table while searching for another job (or starting up another venture).
Plan your exit strategy.
You need to have an exit strategy in mind. This should be part of your business plan, … More >>>