Does anyone really know what the true statistical probability is for an entrepreneur to have a business failure in the U.S.?
The answer is NO—there is not even a close guess! This is because the people and agencies that attempt to determine these statistics use “selected” data, which ignores some 70% of all U.S. businesses.
Why is this even important? Why should an aspiring entrepreneur, or small business owner, even care what the survival/failure rate is?
Well, there are three groups of people that should care a great deal:
- Government policymakers should care. They are the ones who make the laws and regulations that affect our businesses. These people should know the true facts and not rely on half-truths and erroneous data about small business survival when considering new, possibly more damaging, regulation.
- Business investors should know what their chances are of making or losing money before they invest in our businesses. They should be looking for reasons given by us as to whether or not they should believe we would overcome the statistics and make our business successful. But first they need to know what the statistics are.
- Every aspiring entrepreneur and business owner should care, and understand what they are up against statistically, so they can use that information to better apply themselves when preparing their business for starting up.
As an exercise some night, watch Shark Tank on TV and observe the naïveté and lack of planning the wannabe entrepreneurs bring to the sharks. Then switch over to Restaurant Impossible to see what happens when business owners don’t plan, or they become complacent, or they go into denial.
Maybe just knowing how close all small businesses are every day to becoming a statistic could jolt business owners into doing better planning, rise from their complacency, and make smarter decisions. Maybe even work a little harder.
This brings us back to the question: Just what are the survival and failure rates of businesses in the U.S.?
Don’t’ pay too much attention to the numbers being thrown around by business pundits, academics, and writers—their numbers are based on surveys from a selected group of businesses representing less than 30% of the total business population … often less than 10%.
Worse than that, the promoters of these numbers often quote from each other and the numbers tend to change depending on who is doing the telling.
The fact is, that the actual numbers do not exist. No one really knows what the survival and failure rates of the entire population of American businesses actually are.
Although I have been interested in this area for quite some time, I too have not been able to determine an accurate rate of survival and failures for businesses in the U.S. But I do believe that my research and findings come closer to reality than anything I have seen so far.
In addition, I have put all my research and findings into a report called Business Survival Reality: The Mystery of Business Births and Deaths in the U.S.
You can obtain a Kindle copy of this report by clicking here.
One thing I want to instill in readers minds as they read the report, is that even though the failure rate is high—that is not a bad thing!
All entrepreneurs will have failures throughout their lives, for example:
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life, and that is why I succeed.” — Michael Jordan
Many will have their entire business fail—some multiple times:
“Would you like me to give you a formula for success? It’s quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure or you can learn from it. So go ahead and make mistakes. Make all you can. Because remember that’s where you’ll find success.” — Thomas J. Watson
So, my advice to aspiring entrepreneurs and small business owners is to properly prepare your business for success. Do everything in your power to succeed. But if you do have a failure—embrace it and learn that it is not just a part of the cost of becoming successful—but a part of life.
“I really don’t think life is about the I-could-have-been. Life is only about the I-tried-to-do. I don’t mind the failure, but I can’t imagine that I’d forgive myself if I didn’t try.” — Nikki Giovanni, Poet and Teacher
Most importantly, regardless of how many failures you may have over time, you should never, never quit—and never lose sight of your dreams.
Have you ever had a business failure? Let us hear about it, and how you overcame it.