According to INE, 246,589 companies were born in Portugal in 2024. That same year, 73.8% of companies were still alive one year after starting, but only 47.7% made it to the end of their third year, 1.2 percentage points fewer than the year before. More than half of the businesses that open close before they turn three.
This figure does not surprise me. In my years of coaching, most of the owners I meet who struggle in the early years do not have a bad product. They have a good product and a poorly designed business. They know how to do the technical work, but nobody ever showed them how to run a company. The good news is that management can be learnt, and the businesses that survive do concrete things anyone can copy.
The context: many starting, fewer carrying on
The latest data paints a picture of plenty of new businesses and some fragility. The Informa D&B barometer recorded a 20 year high in company formation in 2025, with 53,030 new companies. But in 2026, up to July, new incorporations fell by 4.2% and insolvencies rose by 5%, with 1,216 new cases. Also according to INE, around 186,707 companies closed in 2024.
In short, opening a company is relatively easy. Keeping it alive and profitable is another matter. The period between year one and year three is where most of the game is decided.
Why companies do not reach year three
When I look at young businesses at risk, I almost always find a combination of these factors:
- Lack of cash: the business is profitable on paper but has no money in the bank because customers pay late.
- Dependence on a few customers: one or two clients account for most of the revenue.
- Badly calculated prices: prices were set by looking at competitors rather than at costs and margin.
- No sales system: sales come through referrals and there is no predictable way to generate new leads.
- The owner does everything: there is no time to think about the business because the whole day is spent working in it.
None of these problems is technical. They are all management problems, and all of them can be solved with simple systems applied with discipline.
What the survivors do
They know their numbers every week
Businesses that clear the three year mark know how much they sold, how much they are owed, how much they owe and how much cash they will have in 13 weeks' time. They do not wait for the accountant at the end of the quarter. A weekly cash flow sheet is the simplest and most underrated tool a young business can have.
They define a clear niche
At the start it is tempting to accept any customer. The businesses that survive choose a niche: a type of customer for whom they are clearly the best option. In the ActionCOACH methodology, Niche is the second of the 6 steps to business success, straight after Mastery. Without it, a business competes on price alone.
They work all 5 Ways to profit
A company's profit depends on five levers: number of leads, conversion rate, number of transactions per customer, average sale value and margin. Young businesses tend to focus only on the first, finding more customers. The survivors work on all five. Picture a hypothetical business that improves each of these levers by just 10%. Because the effects multiply, profit grows by far more than 10%.
They have a 90 day plan
An annual plan is useful, but for a young business a year is too long. A 90 day plan, with three to five numerical goals and clear owners, allows you to change course quickly. At the end of each quarter you review what worked and what did not.
They seek accountability
An owner working alone has nobody asking on Friday whether they did what they said they would do on Monday. Surviving businesses build that mechanism in: a partner, an advisory board, a coach. Someone who expects delivery.
A checklist for the first three years
- Do I have a 13 week cash flow forecast, updated every week?
- Does no single customer account for more than 25% of my revenue?
- Do I know the gross margin of each product or service?
- Do I know where my leads come from and what each one costs?
- Do I have written goals for the next 90 days?
- Do I set aside at least half a day a week to work on the business, not just in it?
If you answered "no" to more than two, you already know where to start.
This week's action
Open a spreadsheet and build your first 13 week cash flow forecast. One column per week. In the rows: opening balance, expected receipts, expected payments and closing balance. It will take an hour. At the end you will know which week could bring a problem, and you will still have time to prevent it.
If you are in the early years of your business and want to build solid foundations, the ActionCOACH Porto team is available for a no obligation conversation. In the 90 Day Planning Workshop we help owners turn intentions into concrete goals and routines.