Small BUsiness statistics
Failure Rates
Just over 20% of new businesses, make it just one year. Failure rates go up to 33% the second year, 40% the third year and just under half make it five years. You would hope that the failures would slow but they don’t until after ten years with only one-third of those starting making it ten years[i]. This is a poor success rate, and behind the scenes, houses are lost, credit is ruined, family loans are gone, and those years typically don’t add much to the resume.
While these risks are great compared with Las Vegas, few who start have any idea how hard success really is. It is a wonder anyone actually tries!
Fortunately, in America, we don’t shame those who try and fail like they do in Europe. We admire those individuals who want to fulfill a dream, work for themselves, want a shot at real wealth. Most wealth for individuals comes from business, along with a very few sports and film stars and a few professionals.
There are over 30 million small businesses in the country. 80% of these have no employees[ii]. This includes firms with less than 500 employees, a number that many would think is large. But very few of businesses employ over 100 people. In fact, 99.7% of all businesses have fewer than 500 employees. Below in the second chart, you can see that
[i] SBA Office of Advocacy, Survival Rates and Firm Age, 2013, https://www.sba.gov/sites/default/files/SurvivalRatesAndFirmAge_ADA_0_0.pdf
[ii] SBA Office of Advocacy, What’s New with Small Business, https://www.sba.gov/sites/default/files/Whats-New-With-Small-Business-2018.pdf
Just over 20% of new businesses, make it just one year. Failure rates go up to 33% the second year, 40% the third year and just under half make it five years. You would hope that the failures would slow but they don’t until after ten years with only one-third of those starting making it ten years[i]. This is a poor success rate, and behind the scenes, houses are lost, credit is ruined, family loans are gone, and those years typically don’t add much to the resume.
While these risks are great compared with Las Vegas, few who start have any idea how hard success really is. It is a wonder anyone actually tries!
Fortunately, in America, we don’t shame those who try and fail like they do in Europe. We admire those individuals who want to fulfill a dream, work for themselves, want a shot at real wealth. Most wealth for individuals comes from business, along with a very few sports and film stars and a few professionals.
There are over 30 million small businesses in the country. 80% of these have no employees[ii]. This includes firms with less than 500 employees, a number that many would think is large. But very few of businesses employ over 100 people. In fact, 99.7% of all businesses have fewer than 500 employees. Below in the second chart, you can see that
[i] SBA Office of Advocacy, Survival Rates and Firm Age, 2013, https://www.sba.gov/sites/default/files/SurvivalRatesAndFirmAge_ADA_0_0.pdf
[ii] SBA Office of Advocacy, What’s New with Small Business, https://www.sba.gov/sites/default/files/Whats-New-With-Small-Business-2018.pdf
