Surviving Start-Up

The Early Hurdles of Small Businesses

Your small business is never as fragile as it is while it is just starting up. Within the first year, 20% of small businesses close, and over half are closed by the end of the first decade. While this may sound scary, knowing these statistics, knowing the rate and risks that cause it can help you be better prepared for when you face them in your small business.

Many use startup failure rates to either deter entrepreneurs from opening up shop or to keep expectations low, but a lot of people inflate those rates and ignore the fact small businesses are surviving more than they used to. Survival rates for small businesses have increased by 30% since the late 70s, and the rate has stayed on a steady decline.

The cause of this is that small business owners, or future small business owners, are taking more time to plan for how to handle issues that arise or how to avoid them altogether, and with modern technology, finding out the information needed to have the best chance at success has never been easier.

Why do Small Businesses Fail?

There are a variety of reasons small businesses fail, but let's first look at what all is encompassed when we say a business “fails.” Generally, we consider a business as “failed” if it closes. There are many reasons why this happens, though, and they don’t all mean failure on the business owner's part. Some either retire, sell the business, or merge it with another.

Keeping those reasons for a business to close aside, let's look at some reasons small businesses could face failure.


Cashflow is an integral part of running and growing a successful business. According to Score, the number 1 reason why businesses fail is cashflow. 82% of businesses fail because of cashflow.

Without funds to provide cushion, businesses can run out of cash, or in other words they are not able to make it between payables and receivables. It’s a stressful cycle for many businesses – cash is king in the long-term viability of a small business.

We always say that there are 3 key traits of successful business owners – cashflow, positive attitude, and execution. To insulate cash flow, save funds, take a loan on short term receivables, a line of credit, or other small business financing options such as grants and crowdfunding.

Failure to Ask for Help

Or failure to seek advice - When starting up a business, it may be hard to accept advice for fear of coming off as if you’re not confident in your business, fear of others telling you that you aren’t doing a good job, struggles in active listening, or just the tendency people have to prefer their own ideas and opinions. Overall, accepting advice is a hurdle that can be a struggle for business owners to jump over. Accepting advice is central to effective leadership and decision making. Let's look at some things to avoid when trying to accept advice from others.

Be careful of the source you listen to. People tend to struggle to sort out good advice from the bad. Not only that, but they tend to think that the best advice comes from those they’re closer to or from someone who has high levels of confidence. This can be problematic if the sources aren’t well-versed in the topic they are advising for, or the confidence is incorrectly placed.

Don’t discredit based on bias. Everyone has biases that could hinder them from making informed decisions or taking advice that holds a different opinion from what they believe themselves. Not only that, but people tend to ignore advice given by someone they may have a strained or negative relationship with, even if the advice is sound and holds merit. Taking the time to ignore your personal biases against a person or subject when it comes to receiving advice can help you avoid missing valuable tips in the long run.


The industry you pick is not as simple of a decision as it may seem for an entrepreneur trying to start a small business. If you pick the wrong one, you risk going down fast. Let's take a look at why the type of industry you pick can be important to surviving a startup.

• Market Oversaturation

Market saturation happens when existing businesses meet all the demands of consumers within the area when it comes to certain products or services. Suppose you decided to start up a small hair salon, as an example, in an area where there’s already a handful. In that case, you’re trying to pick from a market that's already spread thin, and you risk not having a high enough positive cash flow to keep the business open and allow it to grow. Picking a business model that can fill a need or demand that isn’t being met in an area is the best way to ensure you have a chance at surviving startup.

• Growing too fast

As ironic as it sounds, a small business can grow too fast for its own good. This can cause several issues, such as quality control, lack of a proper management system, lack of support, stretching your resources too thin, and confusion within the business as employees and employers try to get a handle on everything. Think of it as a flash flood. A steady stream of rain can be handled well, but a large amount of rain suddenly at one time can flood a town.

Here’s some tips on how to avoid growing your business too fast:

• Don’t take jobs that you can’t handle. As tempting as it may seem to take on all the work offered if your business becomes popular, exercise restraint. If you do your current number of jobs well, the quality of your work and your happy clients and customers will help keep opportunities coming your way.

• Make a plan for how to scale your business ahead of the growth. Planning for growth is one of the best ways to avoid being swept up in unexpected growth in your business. Upwork has an excellent article that goes over different ways you can plan how to scale your business.


Picking the location for your business is more important than you think. You might have an amazing business idea with plenty of funds, advertise well, and be prepped overall and ready. Still, if your business isn’t located in an area where your target clientele doesn’t go, you won’t get the business numbers you need to succeed. The wrong location could also mean more work, time, effort, and money into making a building or location work for your business.

Here are a couple of the best ways to avoid picking the wrong location for your business:

• Make a list of the specific needs of your business. Different businesses need different things from the property they’re on. An accounting firm will need a vastly different space than a retail shop. One requires office space and a smaller layout, and the other requires a sizable parking lot, open space for a sales floor, and space to store product shipments.

• Research your Target Clientele - Figuring out who you want to attract to your business can help you figure out where the best place to have your business is. Your target audience is a “specific group of consumers most likely to want your product or service”. Your target customers won’t be everywhere, so doing research into where they are and where they mostly go is important to make sure they can reach your business.

Surviving the start-up process is a task that many small business owners struggle with, but it is a common challenge for many business owners.

There’s a lot more to the first few years of owning a small business that people don’t realize, and it can overwhelm someone unprepared. It’s not impossible, though, and the success numbers are steadily increasing.

If you need help figuring out a good strategy to help you stay ahead in the early years of your business, contact Comprehensive Consulting Solutions for Small Businesses for help, and we’d be happy to help you navigate the process and put a plan together.