Are you considering staring a new business venture?  Statistics suggest that the failure rate for a new business can be as high as 50%.  In a recent Entrepreneur article, Martin Zwilling offers the following top 10 reasons why first time entrepreneurs fail:

  1. No written plan.  Developing a written plan requires discipline and the development of an understanding of how to transform your idea into a business.
  2. Slim or no revenue model.  All businesses must generate revenue to satisfy operational costs so any new business must ensure that potential customers have the financial resources to purchase the goods or services to be offered.
  3. Limited business opportunities.  Obtain market research in sufficient quantity and quality to determine whether there is a justifiable market for your product.
  4. Lack of execution.  Although the idea is the starting point, you must be willing to make hard decisions and take risks to be successful.
  5. Too much competition.  If the market you are entering is saturated with competition sometime even a good idea will not be enough to establish a thriving business.
  6. No intellectual property.  If you will be fundraising and seeking investors, you will need to protect the company’s intellectual property through trademarks, copyrights, patents, non-compete, and non-disclosure agreements.  Intellectual property is often the most valuable asset for a company looking for investors in a securities offering.
  7. Inexperience team.  Investors willing to invest in a start-up company are funding people not ideas, find a partner who has experience to balance your inexperience.  A partner experienced in business formation and fundraising can be invaluable.
  8. Underestimating resource requirements.  In addition to cash, resources such as industry contacts and marketing channels are critical for certain products and industries.
  9. Insufficient marking.  Word-of-mouth marketing is not enough to make your product or service visible.  Effective and innovative marketing across a range of media is necessary in today’s economic climate.
  10. Lack of perseverance.  Don’t give up too early. There will be setbacks and many successful entrepreneurs keep slugging away until ultimately finding success.


If you are considering forming, or have recently formed, a business and would like to discuss legal issues affecting your new start-up, please contact our Business Law Group partner, David A. Closson at [email protected].

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