A common hope among California small business owners is that their company will last for a very long time. However, there are a range of things that could endanger this hope and put a company at risk of coming to an end.
How long do small businesses tend to last here in the United States? In a recent report, American small businesses were estimated to have a median life expectancy of 5.3 years. This estimate was based off of data regarding business account holders with JPMorgan Chase.
One thing that can impact how long a given small business is likely to last is what industry it is in. The above report estimated the standard company life expectancy for twelve different industries. These industries are: construction, health care services, high-tech manufacturing, high-tech services, metal/machinery, personal services, real estate, repair/maintenance, restaurants, retail, wholesalers and other professional services.
Life expectancies varied greatly among these business fields.
The top spot was held by real estate. The standard life expectancy for small businesses in this field was 9 years. Health care services took the No. 2 spot with an expectancy of 8.8 years.
Meanwhile, restaurants were found to have the lowest life expectancy. Small businesses in this industry had a standard life expectancy of 3.7 years.
Whatever field a business is in, its cash flow situation can have very big impacts on its likelihood of staying open for a long time. The study’s lead researcher pointed to cash flow issues as a common killer of businesses. So, financial literacy and cash buffers can be critical things for small business owners.
Another thing that could have impacts on a small business’ likelihood of long-term survival is what happens in legal matters that come up for the company. Legal matters can end up having major impacts on a company’s financial health, which in turn can affect how able a company is to weather challenges. So, how small businesses handle legal issues, and what guidance they reach out for when it comes to such matters, can be incredibly important.