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10
Common Problems for New Businesses

New businesses want to avoid posting this sign.

© iStockphoto/carterdayne

Every busy downtown street has a storefront location that is "cursed." One month it was a pizza place. Six months later it was an optometrist's office. Four months later it was a video rental store. Now it's vacant yet again.

Are supernatural forces really to blame for these failures, or did the owners simply make lousy business decisions?

The famous statistic that 80 percent of new businesses fail within five years is a bit of an urban legend. According to small businesses data from the U.S. Census Bureau, 76 percent of small businesses operating in 1992 were still running in 1996. And only 17 percent of small businesses that closed in 1997 were due to bankruptcies [source: U.S. Department of Labor].

Small businesses are still the engine of the U.S. economy, and entrepreneurs still constitute the vast majority of employers. In 2007, an average of 497,000 new businesses were created each month in the United States [source: Fairlie].

If you're thinking about joining the ranks of the self-employed, then start by learning from the mistakes of others. The following is a list, in no particular order, of the 10 most common problems faced by new businesses.

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