Matt Mansfield is the Tech Editor and SEO Manager at Small Business Trends where he is responsible for directing and writing many of the site’s product reviews, technology how-to’s, and lists of small business resources as well as increasing the reach of our content.
The harshest stat on there for me was that 46% of businesses fail because of incompetence. Ouch!
I found that stat discouraging, too, especially with all the training and mentor programs out there.
80% of surveyed businesses said they had superior service, whereas only 8% of customers agreed with that…..inward mindsets…..this is what an entrepreneur crushes…..
As a longtime entrepreneur and mentor, if I knew what it took to be successful, and all of the success vs failure stats before starting my first business I never would have done it. I always tell young entrepreneurs “Stats are for losers”…successful entrepreneurs don’t pay attention to them. It is just a readymade excuse to explain away flawed strategies and poor work ethic. The most important stat any entrepreneur should know is how many hours a day they have wasted on things that don’t drive revenue. If you take the 46% and extrapolate what those founders did with their time and energy you will always find a common thread. Gravitating to business activities that don’t grow your customer base. Spending prime time customer hours on things that don’t add value to your bottom line. Many entrepreneurs are not prepared to do “anything” necessary for their dream to thrive. Not willing to properly educate themselves on their market, competitors and product placement. Just looking to be the next Startup Billionaire but going into the startup with a 9-5 employee mentality. I can’t tell you how many entrepreneurs say when asked “why are you starting a business?”….answers like I just really think I can….I have a great idea for a_____and know people will buy them…and my all time favorite, I got burned out in Corporate America and always wanted to be my own boss….It’s a ton of this in that 46%. Change your mindset…change the statistics.
Great insight, T.D.! Value-add activities are key. Unfortunately, it’s often hard to distinguish the difference in the moment.
Starlett E. Powers
I’m one those types that is late stepping outside the box. I’m a woman striving to better but have to give it a try. I took up business but never tried to apply towards an idea which I have a lot of but a little afraid of going about the right way. I am writing a small cook book for balance diets. I know there are a lot out there. But I just want to give it try to see if it will go through. This book is for people who want to eat what they want but with less of it. More fruits and vegetables of course which we have a tendency of not eating enough of. I’m one of those people. So I will try to write this recipe book. I’m not really a writer. But will try I already started on the rough draft. It is a lot of work. I sort of a procrastinator.
The reason is that many entrepreneurs are competent at the one thing they started their business for; it’s the other 647 things that must be in your skillset to succeed in business that trip them up. One thing that successful entrepreneurs grasp early on is how to accurately asses their own strengths and weaknesses. They then hire or outsource to complement their weaknesses or those areas where their time is not best spent.
Thank you for all of your insight. It is much appreciated. I am just starting out and while I’m nervous about jumping into a new world of entrepreneurship, I also know that like what was written above – if you know ahead of time some of the obstacles and prepare for them, you are a step ahead of the game. It won’t be easy, but I am excited at the opportunities in front of me.
As an accountant, I do the math. So here’s what I see:
“Leading causes of small business failure:
• Incompetence: 46 percent;
• Unbalanced experience or lack of managerial experience: 30 percent;”
46+30 = 76%
76%!! And coming in at a meager 11% is a lack of experience in the area of expertise. That means that the overwhelming majority of startup failures can be attributed to the ‘business-end-of-business’, not the time spent making the ‘special sauce’. And is it any wonder?
Look at the thousands upon thousands of pages of statutory legislation, in addition to tax rules and, …uh…what’s a debit and a credit? Section 179 depreciation what?
I specialize in the business end of business, which allows the business owners to focus on what they do best, whatever that might be. And when they can rely on key people keeping an eye on the machinery itself, advising on cash flow, increasing operational efficiency, and instituting legal compliance, they can spend their time exercising their competitive advantage. Which is the point, in my estimation.
That is good to know. What about ecommerce business. What are the statistic for this?
Having owned a traditional business or B&M, and now having a lucrative I-commerce business, I’m assuming the numbers are higher. These types of businesses are relatively easier to open, but it’s also much easier to loose focus on the actions needed to achieve the goals. Exactly as T.D. Stated above.
nice research. may i ask where are the sources of the info?
also, do you have any updated statistic of the following finding?
In fact, of all small businesses started in 2011:
4 percent made it to the second year
3 percent made it to the third year
9 percent made it to the fourth year
3 percent made it to the fifth year
Hey Matt, I was just writing a new blog post about how many people start small businesses each year and glad that I found this article! Thanks for taking the time & doing the footwork of collecting all of these stats and sharing them with us!
The overall analysis is good to know. But if the sector-wise analysis will be provided then it will be awesome.
The startup industry is really growing fast. And it is bound to grow bigger in the upcoming years.
Any stats on how many or what % of startups went IPO ?
I absolutely love that statistic… 50-59 years old: 35 percent.
I am so glad I started early in my 30s. Well, I am very pleased to see that at 50 to 60 we still got kick!
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Great article and really enjoyed, the information is precise and I was looking for such stuff on internet I glad I found your article it will help me for my business growth. So thank you so much.
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Thanks, Mate, this article solved my confusion.
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I think the best way to learn as an entrepreneur is to learn from other failed and successful entrepreneurs. They’ve been to where you haven’t and learning from them will prevent you from failing on the business. Thanks for this statistics.
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Thank you a lot for sharing this with all of us you really understand what you’re speaking about! Bookmarked.
It’s great how nicely explained each thing. Gender, age, percentage every bit of information accurately statistically made.
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