Among the tens of thousands of startups created each year in the U.S., the burgeoning companies that transition into successful enterprises are few and far between.
Although the failure rate remains extremely high, entrepreneurs continue to seek innovative solutions to existing problems, helping to build a new workforce and increase productivity across various industries.
The pitfalls of starting a new business are numerous as founders often find themselves devoting too much time chasing funding or customers while others expand too quickly and wind up having to lay off a significant portion of their team to remain in the black.
One-quarter of Americans have thought about becoming business owners, but opted out of the prospect, according to a Gallup poll conducted in 2014. This is not surprising since the number of startups which have failed or shut down since 2008 outnumber those which are being created.
The barriers to entrepreneurship are numerous, resulting in 50% of new companies which cease operating during the first five years. A lack of available early-stage funding, especially for minority and female entrepreneurs, job security and coaching also present hurdles, according to Gallup.
The trade-off for founders is often gratifying as they learn from their mistakes and develop new strategies.
"In entrepreneurship, everything starts with why," said Paul O'Brien, co-founder of MediaTech Ventures, an Austin, Texas-based economic development of innovation in media, and a partner in 1839 Ventures, a venture capital firm providing financing to early-stage technology-oriented companies. "Whether or not you attract co-founders and partners, appeal to investors or customers, or catch the attention of the media and consumers, it depends on understanding why you are doing what you are doing, why anyone will care and why it will matter."
Here are five tips from startup founders or employees for entrepreneurs who are seeking to transform their small businesses into profitable companies.