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Why do so many business start-ups fail?

Owning one's own business can sound like a dream. In New Jersey, many new restaurants, shops, and other businesses open every year, but many of them close before they can celebrate their one year anniversaries. With so few new businesses succeeding, readers may wonder just how come many start-ups fail.

Many new businesses experience early problems that ultimately lead to their untimely closures. For example, a new business owner may rush into opening his business's doors without having a solid plan for the entity. He may not have enough experience to operate a business of the type he has opened, or he may make strategically damaging decisions about the business's location, function or growth potential.

Some new businesses lack sufficient assets and capital to really have a strong hold in their intended markets. Other business owners may believe that they are offering new products or services without recognizing that competition in their industry is present in their geographic areas. Other businesses may fail based on the financial decision-making practices of the business owners, who may pay too much for capital investments, rent, employment or other costs to sustain their fledgling operations.

The bottom line, though, is that almost all of these fatal problems tie back to a business owner's failure to plan. Business planning does not simply mean having a catchy name or a fancy logo; planning means having a solid and financially feasible strategy for growing a business idea into a successful business operation. Creating a business plan can be challenging, but it can save a business owner the financial and emotional heartache of seeing his new enterprise close its doors in its first year. Attorneys who practice business law can help individuals hoping to open their own business start-ups to create plans that can help them thrive.

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