95% of You Will FAIL!

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That is the assertion I hear all to frequently in discussions involving new business startups.  It is as though the listener, a new entrepreneur, is powerless to do anything about it.  Cast a 20-sided die and, if your number comes out on top, you’ll succeed.

[pullquote align="right"]And, it turns out, those odds are wrong.[/pullquote]Don’t know about you, but those odds suck.

I disagree with the assertion that 95% of startups fail when I hear it.

Here’s why.  Two years ago roughly, I started doing a series of presentations on being an entrepreneur. As part of regular day long event to new business owners, I noticed a lot of people talking tactically about the various aspects of business.

(This is a topic I’ve addressed in the past…it bears a fresh review.)

Throughout the day, speakers spent a lot of time talking about business plans. About why you need an attorney, an insurance agent, a CPA, and so on.  Very true. Very tactical. And many of the points made using the basis of Fear, Uncertainty, and Doubt (FUD).

[pullquote align="right"]You can get the slide deck here: http://slidesha.re/gotyL8[/pullquote]I noticed no one spoke to the emotions these new business people (new, not necessarily ‘young’) were likely feeling, the fears they had, friends telling them they’d almost certainly fail. So I volunteered to do a presentation on, "Do You Have It in You to be an Entrepreneur?"

The ‘95% assertion’ was one that I’d heard all my life.  I decided, before propagating it further in my own presentation, to see if I could qualify the statement.

What I found was very interesting.

jtpedersen_95 percent will NOT failAccording to the US Small Business Administration: "Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more."

So, not only is the opening assertion not true, a QUARTER will stay in business 15 years or more. Wow!

In the following slide, I use a chart to contrast conventional ‘wisdom’ with SBA’s reality.

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Now here’s why I did this: Talking to a group of new, or contemplating new, business owners I wanted to give them a sense of hope. Something more positive than telling them essentially: you will fail.

Note: The SBA appears to make no distinction as to why a company ceased to exist (e.g. failed, was reformed as a corporation (e.g. a LLC became a C-corp), merged, or was acquired).

SBA source: (http://web.sba.gov/faqs/faqindex.cfm?areaID=24%20#7)