Episode 110 - Why do 8 out 10 Small Businesses Fail?

The POWER of Small Business

When you study the Small Business Administration statistics on entrepreneurial survival past the 10 year point, you'll find that, on average, only two out of ten survive. Talk to most experienced entrepreneurs and you'll find that most have a lot of scar tissue. Why? Because building a profitable company that survives for the long term is tough. If you look at the last 4 decades, the numbers have remained fairly constant, despite ups and downs in the economy. Is it necessary that we accept eight of ten businesses should crash and burn? It would seem that if we applied basic continuous improvement thinking to this problem, we should be able to yield a better result. Like most endeavors, the real key to understanding the failure rate is to look at what happens BEFORE the business launches. Just like a traditional education, what you learn in high school builds on what you learned in middle and elementary school. If your basic skills are not solid, then it's likely you won't do well in secondary education. Small Business development is very similar... and there is a lot we can learn to improve the 20% survival rate... and we should learn it... NOW!