One of the most commonly overlooked aspects of anyone's exploration into starting a business is an understanding of the "promised land." I can't remember ever picking up a book or article on "Starting Your Own Business" that tells you this stuff. Who knows why? Maybe they are afraid of scaring the browsing book buyer and losing a sale.

It may seem unnecessary even to you but I have found that most people want (and they need) to understand the full story. They want to know what they're getting into.

Contrary to the apparently prevailing belief, the facts do not scare off the true entrepreneur who is genuinely equipped and ready to start a business. And if they scare you off, good! It means you are realistic about your readiness or ability to do what it takes.

So what are these FACTS?

• At the end of 2003, in the United States alone, the Small BusinessAdministration reported over 16 million non-farm businesses - over 90% of which are "small" businesses>
• In 2003 more than 45 million business and sole proprietorship
  tax returns were filed - many businesses file more than one return - in other words many small businesses are engaged in multiple ventures
• In 2003 nearly 573,000 new businesses were formed
• In 2003 nearly 555,000 business went out of business
• Recent research shows that between 20% - 30% of new businesses fail within the first year
• The same research shows that by their 6th year nearly 80% of all new businesses will be out of business

Those are the plain, unpolished, "like it or not" facts. That's what you're up against. So you had better be prepared for some tough competition - remember, all of those folks went in as confident as you.

Why do so many businesses fail?

Logical question! It might help if you knew the most common reasons businesses don't make it so that you can avoid their mistakes. My experience has been that few budding entrepreneurs know about or consider whether they are cut out to deal with these common problems.

As you review the list below, I urge you to consider whether you currently have the education, knowledge, skill, and motivation to effectively deal with such things. Take a hard look. Ask your family and friends for realistic, blunt feedback. Remember - it does not mean the dream is over just because you might need to spend some time getting yourself ready.

Here is a list of the 15 most common reasons for business failure - based on research conducted on the small business owners who couldn't make it:

• Poor overall management - a lack of ability or willingness to
  effectively plan, organize, and manage finances, marketing, sales, operations, human resources, administration, and all of those other nasty but critical pieces of a business.
• Lack of experience - many entrepreneurs do not have either the technical knowledge or the business management and administrative experience required.
• Lack of business and operational planning - yes, that means
  that many businesses fail because they do not know how to or just will not set realistic goals and create solid business and operationsplans.
• Lack of effective control of efficiency, quality, and costs - inefficient production, poor quality, and undisciplined spending.
• Under pricing of products or services - tendency to keep prices artificially low out of fear of losing sales or a lack of understanding about the true cost basis of products or services.
• Insufficient capital - that means the money ran out.
• Poor inventory control - a failure to understand how to effectively manage the stuff on those shelves (for companies that sell products or product-driven services).
• Poor customer service - insensitivity to what is really important to customers.
• Insufficient knowledge of the industry - a lack of insight about what competitors are doing and developments or trends that affect the business.
• Inability to hire and retain key people - someday it won't be just you and your family members.
• Reluctance to seek help - nobody likes those CPA's, lawyers, and consultants but sometimes you need them.
• Failure to create and maintain a positive public image - otherwise known as bad marketing and public relations.
• Poor relationships with vendors - you may not like them but you need them.
• Inadequate risk management - that usually means you didn't have enough or the right types of insurance.
• Poor cash flow control - cash is king, just ask your bank, suppliers,and employees.

Those are the main factors. As you can see, starting and running a business requires experience and skill most new business owners do not bring to the table. And that's OK, as long as you recognize where you are weak, and get the help and training you need to gain the necessary experience. Just be realistic in your assessment of your readiness to start and run a business.