When you’re thinking about starting a new business, it’s important to consider how much money you have, what it can do, and what the potential for returns are.
That’s because, according to a recent report by PricewaterhouseCoopers, a leading financial services company, the biggest challenge for start-ups is how to find and fund a viable business model.
In a report published by the firm last week, the company said that more than one-third of companies that started in 2016 or earlier had a net loss.
PwC estimated that around 5 percent of start-up companies fail to survive the year.
“It is a very challenging business,” said Daniela Gomes, a partner at the investment banking firm Lazard and co-author of the report.
“I would say, the big challenges for the startup economy are: How do you raise money, how do you scale, how does your product fit in with the environment of your environment, how much are you willing to pay for the company?
Those are the big questions.”
PwP estimates that roughly 70 percent of American companies fail in the first year, with the average number of losses reaching $10 million, with around 15 percent going bankrupt.
PwsG said that around one-in-five companies fail after five years.
A year after its release, PwS’ 2017 report predicts that there will be $3.2 trillion in global retail retail spending in 2020.
The PwPS report is based on data from the U.K.-based market research company Mintel.