When Will Your Business Fail?

Finally this past weekend someone showed my some stats I can accept. What do I mean? Well there is a myth out there about business failures. And it goes a little like this “95% of business fail in the first year, and 95% of those fail by year 5, then of those 95% fail by year 10.” Does that give you real motivation to start a business? I think not.

I have tired to search for this information prior but anything that came up was basically crap. I really wanted to find true stat that I could show people an business failures and when they fail so here it is.

The best source of stats that I have found and I use often is from bls.gov it is the Bureau of Labor and Statistics. They keep stats on all things you can find employment stats dating back to the early 80’s. An FYI this info is the latest that I could find.

The stat are:

Year 1 79.8% are around or 20.2 fail in Year 1.

Year 5 45.2% have failed

Year 10 63.7% have failed

That is starting from 1994-2003

From 2000-2009

Year 1 21.2% are gone

Year 5 53.2% failed

Year 10 67.5% failed

Like this shows it is not 95% are gone.

Like Chart 1 show below 49% of businesses are still in business. If you are confused by my 67.5% failed and the chart says 49%. That is all business at year ten or older read the post in the link below.

 This chart/table is from bls.gov click the link to view the page.

I know I cut off year 15 click the link above to go to the bls site.

Percent of U.S. total private establishments by age: March 2009


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