New analysis has revealed the difficulty new businesses have in establishing themselves as successful, ongoing enterprises. According to Experian, around 4% of new businesses have ceased trading by the end of the first year of operations, the analysis found. But the failure rate rises significantly to more than a third (34%) by the end of the second and to half (50%) within just three years of opening.
Meanwhile, nearly two-thirds of businesses (60%) found as being in the highest risk categories for accessing new borrowing are firms which can be defined as ‘young’ – ones which have been formed in the last five years.
The analysis comes ahead of the UK Black Business Show, which aims to support and arm budding black entrepreneurs with the information they need to get their business off the ground, including the importance of a positive business credit score.
James McGarva, Managing Director of Business Information Services at Experian, said: “Our analysis reveals just how tough it can be for new businesses to establish themselves in the short and medium term, with a huge amount for entrepreneurs to consider to give themselves the best chance of success.
“New businesses are the foundation of our economy, and being a business owner is a fantastic and rewarding ambition. Every company, no matter how big or small, has a credit score, with it being the key to accessing credit to help it thrive, as well as being a highly predictive indicator of the business survival. We’re delighted to be supporting UK Black Business Show, encouraging would-be business owners to take their first step and share with them what they need to know.”
UK Black Business Show takes place in London on Saturday October 7th. Experian will be hosting a session on why business credit scores are a vital component of a business’s success, tips on how a score can be improved, and how it relates to an owner’s individual score.
Business owners can find out more about business credit scores by clicking here.
