Well, I made money in the first the first couple months, actually. I run a consulting business.

The other guys...let's get some definitions going here. They made revenue. Unless they were totally hopeless, they had some cash coming in. But they also had expenses going out.

Manufacturers and IT guys who go into business generally don't know anything about selling. They get an "idea" and go create something, and then have to struggle to get it adopted. So they have to throw a lot of cash out, and then try to rake some back in. This is the wrong order; however, that's what most people do.

That is what their first year is spent doing. Developing the idea, and then finding a market to sell it to. If they fail to accomplish these two steps, they won't last much longer.

Until revenue exceeds expenses, they won't make money.

They're also developing systems and processes, and getting experience. They could be growing, in which case they are probably adding people at a high rate which consumes profits as soon as they come in to pay for the new staff. Fast growth can also easily be mismanaged and cause a succeeding business to crash and burn.

Answered 8 years ago

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