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come up with the money to meet payroll and pay your other bills.That’s why you need to keep an eye oncash flow—money coming in andmoney going out. You need to control costs and collect money that’sowed you, and, generally, you need to know how to gather the financialinformation that you require to run your business.•Manage your time efficiently. A new business owner can expect to worksixty hours a week. If you want to grow a business and have some typeof nonwork life at the same time, you’ll have to give up somecontrol—to let others take over some of the work. Thus, you mustdevelop time-management skills and learn how to delegateresponsibility.•Know how to manage people. Hiring, keeping, and managing good peopleare crucial to business success. As your business grows, you’ll dependmore on your employees. You need to develop a positive workingrelationship with them, train them properly, and motivate them toprovide quality goods or services.•Satisfy your customers. You might attract customers through impressiveadvertising campaigns, but you’ll keep them only by providing qualitygoods or services. Commit yourself to satisfying—or evenexceeding—customer needs.•Know how to compete. Find your niche in the marketplace, keep an eyeon your competitors, and be prepared to react to changes in themarketplace. The history of business (and much of life) can be summedup in three words: “Adapt or perish.”Why Do Businesses Fail?If you’ve paid attention to the occupancy of shopping malls over a few years, you’venoticed that retailers come and go with surprising frequency. The same thinghappens with restaurants—indeed, with all kinds of businesses. By definition,starting a business—small or large—is risky, and though many businesses succeed, alarge proportion of them don’t. One-third of small businesses that have employeesgo out of business within the first two years. More than half of small businesseshave closed by the end of their fourth year, and 70 percent do not make it past theirseventh year.Amy E. Knaup and Merissa C. Piazza, “Characteristics of Survival:Longevity of Business Establishments in the Business Employment Dynamics Data:Extensions,” Bureau of Labor Statistics,(accessed August 31, 2011); Amy E. Knaup and Merissa C. Piazza, “BusinessEmployment Dynamics Data: Survival and Longevity, II, Monthly Labor Review •Chapter 5 The Challenges of Starting a Business5.7 How to Succeed in Managing a Business257
September 2007,” Bureau of Labor Statistics,09/art1full.pdf, (accessed August 31, 2011).Table 5.2 Survival Rate of New CompaniesNumber of Years after Start-upRate of Survival181.2%265.8%354.3%444.4%538.3%634.4%731.2%Note: Percentages based on a total of 212,182 businessesthat started up in the second quarter of 1998.Source: “Characteristics of Survival: Longevity of Business Establishments in theBusiness Employment Dynamics Data:Extension.”st060040.pdf.As bad as these statistics on business survival are, some industries are worse thanothers. If you want to stay in business for a long time, you might want to avoid