What really causes small business to fail?


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Category: Digital Media, Venture Capital

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Small Business Success/Failure Rates”

  1. spencer says:

    I have always had problems with the estimate that small firms account for 50% of GDP”.

    They only account for about 44% of private employment and and the average small business salary is significantly lower than salaries in large firms. This suggest to me productivity is lower in small firms than in large firms.
    Consequently they should account for much less than 50% of GDP.

    The original source of this estimate was an econometric study paid for by a small business organization and the best
    I can tell is that they just assumed that small business productivity was higher than large business productivity.

  2. Theravadin says:

    The other thing that these statistics do is put paid to the Republican cant that increasing taxes on those with incomes of more than $250K/year will damage small businesses. With 93.1% of small businesses having revenues of less than $250K… let alone profits… Another example of… well, the only word that comes to mind is… lying.

  3. tradylady says:

    How ’bout adding the cost of government regulations, i.e. ISO certification, audits, reaudits and recertifications, a food chain that eats away at our profits.

  4. zcwotun says:

    So 64% of new jobs over the past 15 years came from small biz….fair enough and sounds right—–what about lay-offs?

    57% of small biz have revenues less than $25k. Fair enough again—how many of those are hobby/shell small business to take advantage of write-offs?

    I’ve always thought of opening a bar as a barely-break-even side business ;)

  5. readerOfTeaLeaves says:

    True story: in the decade from 2000 to 2010, I had a biz loan from Wells Fargo.

    I once decided to avail myself of the ‘small business expert’ at Wells Fargo, probably 2003 or 2004. This ‘expert’ turned out to be a young man who had a college degree (in what, I have no clue). His previous job was at Best Buy, where I gather he was a sales clerk.
    Basically, he wanted to sell me small business financial products, so I suppose ‘sales’ was the relevant part of his background.

    Go figure.

    Biz and econ blogs have been infinitely more useful and helpful.
    Also, wayyy more IQ points.

  6. RW says:

    It’s clear that (a) developing a viable business plan and (b) raising enough capital to grow the business past the initial revenue shortfall are the main ingredients for success just as failing to do (a) or (b) or both dramatically increases the chance of failure.

    The specific reasons for failure are probably as varied as the businesses themselves but inaccurate projections or a change in circumstance that alters projection mid-stream probably rank pretty high.

  7. Futuredome says:

    Harvey Milk tried that small business stuff in San Francisco and it didn’t work. He got what was coming to him.

    Fact is, I don’t know why Republicans even bother whoring themselves to small business anymore. It just isn’t worth it. They don’t want to provide much help other than “lower regulatory costs” boy, that is going to be a long term winner when your policies will reduce customers, which is what any small business needs to prosper.

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