No doubt you’ve heard someone — even a highly educated someone, expound about the failure rates for small business. Some say that 90% of small businesses will fail in the first 5 years. Others use the 60% failure in the first three years.
In fact, you can pretty much find any old numbers to support any dire predictions. But mostly it’s all wrong. It’s pretty much unreliable.
Which is really good news if you are looking at opening a small business. The failure (as in horrible, disastrous failures) isn’t as high as you have been told. And, we don’t exactly know what the failure rate is, and it’s likely to fluctuate considerably depending on economic conditions.
Here’s the simple reason. It’s definitional. While there are studies all over the place about business failure, how business failure is defined varies from place to place, and often it includes businesses that have been sold (even for large profits), or closed due to death, or family issues, or a number of other reasons.
So, it may be true that x percent of small businesses close within x years of starting, but we do not know WHY they closed, or whether they “failed” or not.
Running a successful small business is difficult, but if you feel you have the vocation and have the skills and desire, don’t let the numbers discourage you. Since the numbers, at leat in this case, simply don’t mean much without knowing HOW the numbers have been calculated and exatly what the numbers mean.
