Small Business Mortality Rate

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Small Business Mortality Rate
Bill Carter, Member
State, local and federal government resources are expended each year to encourage entrepreneurship and small business start ups...
85% of all US jobs are created through small business.
However, almost every year the SBA, in its Annual Report to the President, states that for every 10 new businesses that start up each year, 6-7 will not be around in 4-5 years and another 1 or 2 will disappear during year 6 or 7. (This would say we have a pretty consistent and chronic annual "Job Loss" statistic to go along with the often sighted "annual job creation" statistic).
There are many books and articles written every year explaining the top 10 "reasons why businesses fail" but there seems to be a "timing" factor at play here. Something fairly consistent seems to be happening relatively soon after start up according to the SBA's annual report.
What's is going on here? Seems we have an alarming and chronic "small business infant mortality" rate...

Small Business Mortality Rate
James Roberts
I have started new businesses from the ground up from the age of 15 in 1975. This statistic has been around longer than I have and the top reasons why businesses fail has been pretty consistent as well. What continues to amaze me is the lack or inability for society to learn from its mistakes or the mistakes of others. It does not take a lot of smarts to figure out that if poor or lack of planning leads to failure in 1-7 years, invest the time and or money to do it right. Running a successful business by the seat of your pants, learning as you go along will only get you so far.
Also realizing that successful businesses are successful because they have a team working together means that running a business that is all you likewise will only get you so far down the road. A time comes when you have to graduate from being a Solo-preneur into an entrepreneur. As an entrepreneur I am not ashamed to say that I would not be were I am today if it were not for my team helping me all the way!

Plan the Business ⇒ Start the Business ⇒ Improve the Plan
Dr zahra gheidar, Member
More than one year passed from launching our small business. We experienced a lot of unpredictable events. Our costs tripled because of inflation. Our contracts were unclear. We had estimated a 5 months period to reach profit, and we didn't have any financial support of government.
Now I know, our expectations of achievement was unreal. We had made a wrong view of our business. We must persist to success and for consistency we need time.
So it's right that before we establish a business, we should prepare an accurate plan, but in reality it is different. In fact we should accept our business with all of its problems and then start to adjust.
Then we should make an improved plan reflecting a real level of expectations of our business.

Decreasing Small Business' Mortality Rate
Sunday ELKANA (koachkonsult), Member
When small businesses are down the road, say after 3 to 4 years should, they should as a matter of business policy review their start-up structures.
Why? Because the initial structures cannot sustain a business for many years down the line in view of the dynamic economy and changing government policies.
This demands that the entrepreneur and his team should be extremely proactive and up to date with current economic trends, market demands and changing lifestyles.
Government, on the other hand, should make deliberate policies to protect small businesses.
Thirdly, small businesses can run in partnership with larger corporations. This would help the entrepreneur survive the stormy first 5 years of the business.

Good Business Plan is Mandatory for Business Survival
Peter Gibbins, Member
Small business often starts with an enthusiastic idea that passes the 'feels good' test. There is cursory planning focused on the doing and little focus on the surviving.
A good business plan is mandatory for success. Initially it should be a combination of the strategic opportunity and the operational necessity of the business.
It should focus on the key roles necessary for the business to survive and an expectation that the enterprise will need to employ people to fill these roles. Solo is a no go. It is a recipe for failure as the entrepreneur will either run out of capacity to grow to meet the market for his product or wear out his support structure (family).
Starting small is fine as long as you plan to grow and understand why you are in the business. If the business is an ego trip or an I can do it better than anyone else event, it is sure to fail.
An entrepreneur with a great idea and a dream to take it to the world can succeed. The important factor is planning manageable growth.


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