President Calvin Coolidge once said, —The business of America is business.“ Everything you do in your financial life has something to do with business, in some way. Even if you are a real estate investor or a stock market trader, you are in a form of business. You have sales and revenues. You have profits and losses. You have assets and liabilities. You have choices and decisions to make, and continually changing competition and economic forces. Everything that has to do with money involves business principles in some way.
Some statistics suggest that 80% of new businesses fail within two years. Another 10% - 15% of new businesses fail within four years. In many cases, the people starting these businesses invest everything they have, plus everything their families will lend to them, plus 2-4 years of their lives, only to emerge penniless at the other end.
The primary reason that people do not start businesses is because they are afraid that they are going to fail, and lose all their money. And in many cases, they are right. However, if you study the numbers more closely, a different picture emerges. The fact is that most businesses started by inexperienced businesspeople fail within a few months or a couple of years. This is simply because inexperienced businesspeople do not know how to make sales, generate revenues, deliver products and services satisfactorily, hire people and manage or administrate a fast-moving entrepreneurial enterprise in a highly competitive marketplace. Probably 99% of businesses started by people lacking business experience fail within the first two or three years.
And why is the rate of new business failures so high? It is because the entrepreneurs have hopes and dreams, but they don‘t know exactly what they have to do to make a business successful. They may have an idea for a product or service, but they don‘t know all the things they need to know to sell and deliver that product or service at a price that enables them to survive and grow. We‘ll talk about some of these key success factors in the course of this book.
