I keep hearing slightly different statistics on this, but roughly speaking, any given random American business has somewhere around a 98% chance of failing in the first five years.
From Mike Darwin's "The Armories of the Latter Day Laputas, Part 5":
"While it is well known that most start-up businesses fail, the uniformity of that failure is generally under-appreciated by members of the general public. Historically the rate of start-up failure in the US has been in the range of 98%, however, since the 1940s this has declined to ~5% of all new business enterprises.[1]"
Better than you thought, perhaps, but the mortality doesn't go away:
“In 2009, the Japanese business analysis and survey firm Tokyo Shoko Research (a combination of Dunn and Bradstreet and TRW in Japan), conducted an examination of the founding dates of the 1,975,620 enterprises in their database.They found 21,666 companies which have existed for over 100 years. The Bank of Korea conducted a similar evaluation of their database and found that there are 3,146 firms founded over 200 years ago in Japan, 837 in Germany, 222 in the Netherlands and 196 in France. There are 7 companies in Japan over 1,000 years old; 89.4% of the companies with over 100 years of history are for profit businesses. However, a closer examination of the history of these long-surviving enterprises reveals that many underwent takeovers, buyouts and essentially a complete restructuring of mission and the nature of the business the firms were engaged in – often more than once in their history. Thus, the chances of a business entity (excluding religious and academic institutions) surviving for >100 years is 1.096%.”
If those two quotes don't help, possibly other statistics in Darwin's article would?
Ah, this does look quite valuable! It's not quite what i was looking for, but it'll be helpful nonetheless. Thanks!
I'm planning on starting a business in a few years. I realize that I have absolutely zero entrepreneurial experience and really don't know what I'm doing when it comes to appealing to my target audience. I know a number of psychological tricks that should in theory work, but theory and practice often differ and my understanding of the theory isn't robust enough to make up for the difference.
So, what I need is some kind of rational direction to look in so that I can start digging into the basic marketing research I'll need to do before I plunk money down on a business. At this point my expertise is limited to having read Michael Gerber's book The E-Myth Revisited, which in my naivety seems like a good way to address the question of how to avoid being a victim of the stunning failure rate of private businesses. But I really wouldn't be surprised to discover that Gerber is just dead wrong and that I don't have the background needed to understand that.
So, my question is: Where can I look to get rational guidance on this? I prefer a book or a series or something like that since I don't have the money to hire a professional yet, and it's still a bit early to start plunking money down on the seed of a business idea.
I doubt the nature of the business I'm thinking of is all that relevant since I'm looking for pretty basic, general information on marketing. But as I could easily be wrong: This is for a school. My hope is to get an alternative high school set up that trains students to be meaningfully ready for the modern world, dropping the stuff that's there purely due to cultural momentum. By and large (but not completely), this means focusing on metacognitive skills rather than primarily on subject content. I'm an education researcher and know of a number of psychological tools that are extremely promising and have proven effective in a wide range of cases but simply haven't been adopted for use in classrooms on any relevant scale, so part of my work between now and when I start this school is going to be aimed at doing research to hammer out the pragmatics. But that's the idea in a very tiny nutshell: use findings in psychology and sociology to teach stuff to teenagers that they'll actually find useful throughout their lives and that society will be glad that they know. I'm interested in making this a business primarily because I need it to provide me with enough of an income that I don't have to distract myself with some other job in order to support my family.
So: rational marketing research methods. Anyone have a good direction for me?