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How Many Start Ups Fail

Sep 05 2012

Local businesses

Local businesses (Photo credit: Wikipedia)

Statistics on how many start ups fail are notoriously hard to find. The problem is that the statistic is based on a number of different assumptions, not all of which apply to any given business. For example, some businesses are not businesses in the traditional sense; they were started as an experiment to see what would happen or as a shell account for another business. Also, some businesses may fail, but the owner may decide to keep the paperwork current in order to re-launch the business at a later date. In short, although only roughly 36% of all start ups last until their tenth anniversary, it is hard to determine what the exact statistics are.

In general, start ups tend to fail because the person got into the business for the wrong reason or because the person received advice from the wrong person, usually a family or friend. Also, sometimes emotional issues clouded the situation, such as pride or being too optimistic or pessimistic. Knowledge of the local market also contributes, proof that timing is just as important as having a great product. Time and family pressures are also listed as reasons for failure, as the new business took too much time from other pursuits. Although there are a number of reasons that the business ultimately failed, the bottom line is that the business has to fit the person and be something that fills a niche in order to work.

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