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Real Statistics Show That 70 Percent of Small Businesses Succeed At First

Many have heard that nine out ten small businesses fail, or other similarly dismal numbers. The actual truth is much better.

Few Fail

The federal government is one of the most reliable sources of economic data available. They collect a great deal of data, and then go back to check the accuracy. This process results in correct historical information that can be used by anyone.

Their data contradicts the conventional wisdom on small businesses. The researchers found that survival rates (for new small companies) are consistent across states and major industries, and the data offers a reason to be confident.

Success rates are actually fairly high. Data from the Census Bureau shows that 69 percent of new firms with employees survive at least two years, and that 51 percent survive at least five years. An independent analysis by the Bureau of Labor Statistics shows that 49 percent of new businesses survive for five years or more.

Their researchers went even further, and discovered that 34 percent of new businesses survive ten years or more, and more than a quarter (26 percent) are still in business at least fifteen years after being started.

Small Businesses Really Do Drive the Economy

One reason many may believe that businesses frequently fail is because there are a large number closing every year. In 2009, for example, more than 550,000 businesses were opened, and more than 660,000 closed. This occurred during a recession. However, during an economic expansion, the number of new businesses would outnumber the closures.

Many people may not realize how many small businesses there are in the country. In 2009, the Department of Commerce estimated that there were 27.5 million businesses in the United States. Only 18,000 of those businesses had more than 500 employees, the rest were considered small businesses.

Misinformation is common in all walks of life, including business. If you are considering opening a small business, these statistics should provide you with the much-needed confidence, since the odds favor success. Get facts from the Small Business Administration and other reliable sources, rather than accepting rumors.

Author:

Michael Carr is a small business expert who has been involved in the successful development of three small businesses.