Dear M & M: What is the survival rate for new firms and existing companies? –Brandy
Dear Brandy: “About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time.” – Source: U.S. Bureau of Labor Statistics, BED. The latest data from the Small Business Administration (SBA) states that nearly 66 percent of small businesses will survive their first two years. That means only about one third of total businesses will actually fail in these first two crucial years, the main cause being a lack of experience. When the data is extrapolated four years out, the number of surviving businesses has been consistently near the 55 to 60 percent mark. This same data shows a five year survival rate that has historically hovered around the 50 percent mark, a far cry from the 80 to 90 percent failure rate so commonly claimed. Source: Ryan Jordon Entrepreneurial Magazine. Here are some statistics on the state of small businesses. Small businesses make up a bigger piece of our economy than you may realize. Businesses with less than five employees make up 62% of all businesses in the United States (U.S. Small Business Administration). More than half of the businesses in the U.S. are small businesses, and that number is growing. The number of small businesses in the United States has increased 49% since 1982 (U.S. Small Business Administration). You won’t be alone in the small business world, and more and more entrepreneurs are joining this community as well. An average of more than 500,000 U.S. adults started businesses (incorporated and unincorporated) each month in 2014 (The Kauffman Index). This represents a jump from 0.28% of the adult population in 2013 to 0.31% in 2014. The number of immigrants who started businesses in the U.S. increased from about 13% in 1996 to nearly 29% in 2014 (The Kauffman Index). As the startup economy continues to gain strength after a downward turn in 2010, there is plenty of opportunity for entrepreneurs from all walks of life. 51% of people asked, “What’s the best way to learn more about entrepreneurship?” responded with “Start a company” (Small Business Trends). There’s something to be said for just doing it. You have a passion and love for what you’ll be doing, and strongly believe — based on educated study and investigation — that your product or service would fulfill a real need in the marketplace. I must agree with Business Know How and Patricia Schaefer when she stated the following four characteristics that will help your new start-up or existing business thrive. Number one; you have driven, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever. Number two; failures don’t defeat you. You learn from your mistakes, and use these lessons to succeed the next time around. Studies of successful business owners have shown they attributed much of their success to “building on earlier failures;” on using failures as a “learning process.” Number three; you thrive on independence, and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints. Number four; you like — if not love — your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals.