Starting a business from scratch is a tough proposition. Access to capital is one hurdle entrepreneurs must overcome, along with stiff competition, market timing, and securing key talent.
According to the latest data from the U.S. Bureau of Labor Statistics, around 20 percent of businesses fail in the first two years of operation, whether they provide a product or a service. The reasons include a lack of market demand, cost-related issues, introducing an unfriendly product or a service, and not being able to hire the right team.
After the first five years, 45 percent of businesses are no longer around, while 65 percent of enterprises aren’t around after 10 years. About 25 percent of companies make it past the 15-year mark. While some businesses are acquired, most failures are caused by customer-centric challenges, a lack of resources, and slow payment schedules.
On the latter front, many large- and medium-sized companies, those producing more than $10 million in annual revenue, offer programs to advance entrepreneurs, especially among minorities — Black, Hispanic, Asian, and Native American — along with women-owned and veteran-owned businesses. But when it comes time to pay an invoice or a purchase order, long and aggravating delays often ensue.
The fact that many companies, organizations, and municipalities can’t pay an invoice within 30 days to 45 days is unconscionable, especially when they require entrepreneurs to fill out mountains of paperwork just to get in the door. In some cases, medium- and large-sized corporations hold up their newly signed minority businesses like shiny objects or adornments — a symbol, more than anything else.
Behind the scenes, it’s a crap shoot. Once a small business gets past the first step, the irony is there are few, if any, resources available to help them navigate working with multiple departments and people, or maneuver around inconsistent operations from one division to another — and there’s little or no access to the people who actually pay the bills.
That lack of basic backend support is a major reason small businesses fail. It also explains why entrepreneurs avoid working with some organizations or avoid labor-intensive small business competitions; it’s not worth the time and effort when it can take months to receive funds.
Given that access to capital is a recurring challenge, DBusiness has launched a free service called Hustle and Muscle. At the outset, minorities, women, veterans, small business owners, and first- and second-stage companies that are seeking capital and are based in Michigan can visit our website and fill out a profile.
From there, we’ll review the information and then send it in an email, with a link back to the profile, to investors across the state. In preparation, we’ve compiled a list of venture capital firms, family funds, private equity groups, angel investors, economic development organizations, and more.
Our goal is to be a conduit to assist Michigan-based entrepreneurs in scaling or opening new businesses — whether it’s a bakery, an online store, or an insurance firm. And if a deal comes together, we’ll report on it. We’ll look to add more services for entrepreneurs, as well.
The mission of DBusiness is to cover businesses based in metro Detroit and Michigan that are either growing here, nationally, or internationally. Now we’re taking it a step further. Please join us.
With everyone working together, we can advance economic growth and open up opportunities in Michigan like never before.
