Success Rate of New Business
The Stats and Facts


Success Rate of New Business / Do New Businesses Have A Good Chance Of Success?

According to data gathered by the U.S.  Bureau of Labor Statistics most failures of new businesses occur within two years of their existence. The data also shows that across different sectors 66 percent of new businesses were still operating 2 years after startup. After 4 years 44 percent were still operating. These rates of survival are consistent across various industries.

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Success Rate of New Business / How is Failure Defined?

Professor David Blanchflower, Professor of Economics at Dartmouth University said that this data and other surveys are skewed because when these data indicate failure they count any other causes for the business ceasing operations as failures.

 Some of these are not even closures they are just business changes. Take a successful consulting practice with a sole proprietor. The owner is likely filing his business income under his personal income tax return and his own social security number.

In the event of an incorporation, the business will get its own tax identification number and so the consulting practice with the sole proprietor is now recorded as having ceased operations and will therefore be labeled as having failed when in fact it has gotten larger!


Success Rate of New Business / The Role of the Business Owner

The majority of businesses don’t fail, their owners cease operating for a variety of reasons which have nothing to do with whether the business is making money or not. A good business to take as an example are restaurants. If conventional wisdom is to be believed restaurants have an uncommonly high closure rate. Sometimes failure rates of 90 percent are even mentioned.

A Professor in Ohio State University, Professor H.G. Parsa conducted a study in Columbus, Ohio of restaurants opened between 1996-1999. 26 percent closed during and up to the first year. 19 percent more closed during the second year. During the third year an additional 14 percent ceased operations. A total of 59 percent closed during those three years.

Professor Parsa discovered that reasons besides economic necessity caused these closures. The operators cited poor health, divorce, other personal reasons, and most of all the unwillingness to make the immense commitment necessary to operate the business. Entrepreneurs with resolve with find a way to survive through the worst personal times and in times of the deepest economic recession.


Success Rate of New Business / Is There No Hope For The Budding Entrepreneur?

Positive thinking and optimism are the best tools for the budding entrepreneur. When coupled with knowledge, wisdom, and a great passion for what you do, you the small businessman can offer such great value to your customers that you will be poised on the road for the long haul.

The success of any business ultimately depends upon you. As a dedicated business owner you can show your love and your passion for what you do by giving value and showing excellence in every facet of your business. When you build your reputation with the excellence of your customer service you will be on your way to a long and prosperous voyage which will be the more enjoyable for you since you will be doing what you love.
        
Thank you for visiting the Success Rate of New Business page. Looking for some more inspiration and practical advice to follow through with your business ideas? Use these valuable resources:         

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