Why Do Businesses Fail
Businesses usually fail because of bad decisions. According to research done by Statistic Brain, 46% of businesses failure is caused by incompetence which includes:
- Emotional and no knowledge of pricing – Poor or no accounting setup
- Living too high for the business – No proper use of accounting information
- Non payment of taxes – Poor accounting setup
- Lack of planning – Accounting information not used in decision making
- No accounting system setup and/or no knowledge of basic accounting
- No experience or inaccurate record keeping
A little knowledge of basic accounting can go a long way in keeping your business organized and profitable.
What Percentage Of New Businesses Fail
Although the percentage varies depending on the length of time a new business is open and the industry it is in, the average consensus is that about 50% of businesses fail within the first four years of being in business. A simple breakdown is shown below:
- 25% of new businesses fail in Year 1
- 36% of new businesses fail in Year 2
- 44% of new businesses fail in Year 3
- 50% of new businesses fail in Year 4
- 55% of new businesses fail in Year 5
- 60% of new businesses fail in Year 6
Accounting Is The Key
Accounting knowledge is a powerful tool and it is the key to success. Accounting is the heart of business feeding decision makers with details they need to succeed.
Looking at the reasons why business fail above, we will notice that accurate accounting information would have helped prevent business failures in almost all of the reasons mentioned. Accounting is an information system that identifies, measures, records and communicates relevant, reliable, consistent and comparable information about an organization’s economic activities. Its objective is to help businesses make better decisions. It also helps individuals better assess opportunities, products, investments, and social/community responsibilities. In addition to reporting on the performance of a business, what the business owns, and what it owes, accounting opens our eyes to new and exciting possibilities. Like we always say at Using QuickBooks Academy – Let QuickBooks do the “Debits and Credits” and generate the reports while you use the information in the reports to make informed business decisions. However, in order to understand the reports QuickBooks generates, you need to have at least basic knowledge of how QuickBooks works.
Benefits Of Using QuickBooks
Although there are many benefits to use QuickBooks for your business, some of them are:
- Ease of Use and User Friendly
- Easy To Customize To Your Needs
- Compatible With Microsoft Excel and Acrobat Reader
- Many Detailed and Customizable Reports
Let’s Get Started Knowing Your Numbers Now!