March 9, 2005
News & Opinion: Startup Stats
I was looking through a new book called Startup Nation by brothers Jeff and Rich Sloan (Currency Doubleday, 5/17/05). The book is very typical of the genre. They cover a lot of ground and give a general overview of everything from business plans to PR to legal structures.
Here are some interesting stats that I had not seen before:
- It is a myth that four out of five businesses fail within five years. Bruce Kirchoff, a former chief economist for SBA, researched it for his former boss. He found it very hard to justify that number. He found that 40% of businesses he researched were still thriving after six years after their startup. Only 18% of companies he researched actually filed for bankruptcy, a definitive sign of failure. The problem is that much data kept on small businesses is incomplete. It is impossible to track things like change in name, change in location, or retirement of the owner.
- Studies show that more than 60% of successful entrepreneurs have at least one parent who is or was self-employed.
- Studies from both Harvard and Columbia Universities reveal that 70% of entrepreneurs are firstborn children. If you're a second or third child with six or more years seperating you from your oldest sibling, you're also more likely to be entrepreneurial.