Urban Legend: 80% of Business Fail
Impact Lab has a post that offers sound advice for any small business.However, before I get to his advice, I need to offer a critique. The premise of the advice is that 80% of small businesses fail. Guess what? That is an urban myth. There has never been a study that shows this high a failure rate — ever. Some studies using flawed data showed as high as 60%, but they count a business that is sold as a “failure”. If the company no longer existed, it was counted in the failure column. Now with better data the studies indicate 40-50%. And remember, with training and education these failure rates drop to 15-25% in other surveys.
Photo by twitchcraft_galore.
Urban Legend: 80% of Business Fail at inluminent on April 4th, 2006 8:01 pm
[...] one is for Scott Johnson: Urban Legend: 80% of Business Fail … Scott always says “Yes, I know 80% of small businesses fail” in his podcasts (which are excellent by theway) # [...]
Small Business News and Resources from MyNewCompany.com » Blog Archive » The Myth of Business Failure Rates on April 4th, 2006 11:00 pm
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Jonas Antonsson on April 5th, 2006 8:04 am
Interesting.
I’ve always found the “failure” numbers to be incredibly high. It is the same with funding risks and the myths surrounding how hard it is to find money (it might be hard but not nearly as hard as indicated by “the myths”).
I’ve often wondered if this is an unconscious effort to keep entrepreneurship, competition and/or loosing talented people from being a worker to being an employer to a minimum. Whatever the reason is I personally think that starting a company doesn’t need to be that hard if the entrepreneurs do their homework properly.
Danny Taggart on April 9th, 2006 11:49 am
An 80% failure rate seems very low to me. If it really is that low, that’s great news. That means all I have to do is start 5 businesses and one of them will succeed. All I need is one success anyway.
But yes, I agree, the way such statistics are cited in the media makes you think that the media have some sort of impulse to suppress entrepreneurial capitalism and promote mindless droneism.
Hibba on March 21st, 2007 2:13 am
Ok, how the hell are yuo going to afford to pay for 5 businesses? Not very practical is it??
LOL
tim.thinks on October 9th, 2009 11:13 am
As Mark Twain said, “There are three kinds of lies: lies, damn lies, and statistics.”
http://www.moyak.com/papers/small-business-statistics.html
Really interesting article here that supports the high failure rate of business. In Canada, 145k new businesses start and 137k new businesses declare bankruptcy. That’s pretty easy math that supports a much higher than 60% failure rate.
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