Comments on: What Do You Think About These “Business Truths”

By: James Arthur

James Arthur — Fri, 24 Aug 2007 10:12:02 +0000

When I became self employed my bank manager explained about the 80% statistic (it may have been a different percentage or different number of years, but roughly of the same magnitude). They said that it correlated with the number of businesses that they ran accounts for that had wrapped up due to closure, so it’s a fairly accurate figure in that respect, but he explained that it’s not the same as saying “80% of businesses fail” because:

* It includes businesses being taken over, mergers etc. Quite often one business is absorbed into the other, as though one has folded.

* It includes self employment. Some people register for self-employment and get employed later on (like me).

* It includes failed startups – people who start a business with improper preparation, or realise that their hearts aren’t in it, or register the company but fail to get funding to progress. These are legion, but usually don’t last more than a year or two.

* There are numerous other reasons why a business would shut down without it being considered a “failure”.

Then having said that, he said that a lot of businesses do fail outright. If it were easy everybody would be doing it! :)

By: JP

JP — Fri, 24 Aug 2007 06:07:15 +0000

I always love that 80% failure rate statistic. People selling business books and seminars to people without experience love to quote it. Consider this: A businessman in the USA starts as a sole-proprietorship. The following year the owner takes on a partner so he legally closes the business and reforms it as a partnership. A couple successful years later, the business again reorganizes as a corporation and the partnership is dissolved. A year later the business relocates to another state in the USA and has to reincorporate.

If you just looked at the legal records, you could claim that businessman had 3 companies go out of business in five years in that state in five years! Is he unsuccessful?

Another thing these guys don’t tell you is that many small businesses are formed simply as a legal structure for people doing business together for a short period of time such as the life of a single project. Those businesses are not intended to last more than a few years.

If all these business gurus really held the secret to success, we’d all be taking their classes and making millions! ;-)

By: Juuso - Game Producer

Juuso - Game Producer — Fri, 24 Aug 2007 05:26:36 +0000

Zeha and Tuna: check out the article I linked to. There you can find numbers based on research, not in “well known facts” ;)

By: Tuna

Tuna — Thu, 23 Aug 2007 20:49:42 +0000

80% is a high number, and it would seem that its impossible for that many businesses to fail but I’ve worked at so many places and seen many others go out of business very quickly. One of the first places I ever worked at failed because the owner had absolutely no idea how to run a business, it never showed a profit and continued to hemorrhage cash until the owner had to sell one of his investment properties to pay off current debts. I also remember back in my home town, there was this one building, and during the entire time I lived in that town there was at least 1 business that came and went each year. I think the main reason for the massive amount of failures is because people don’t know how to manage every aspect of a business. They may be really great at accounting, handling employees, or some other facet of business but you really have to be able to tackle every part of your business for it to be successful. Actually starting the business is what is most challenging, and the most challenging part of that is getting the proper amount of cash to do so. A lot of people under estimate the amount of money needed to start a business, and most businesses go under quite fast which is why I think the failure rate is so high. They fail so fast that a lot of people don’t even realize a business ever existed.

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Thu, 23 Aug 2007 20:02:31 +0000

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Top News Online Business FlyLady Nags Her Way To Millions — Thu, 23 Aug 2007 16:04:41 +0000

By: ZeHa

ZeHa — Thu, 23 Aug 2007 16:02:56 +0000

The first one may be true – because there are many people who try to kick off some business without passion or producing quality. And if you count all those – it may be true ;)

But if you only take those who really try to provide something good, and those who really stand behind their stuff and, I think many of them will succeed. Maybe in some other way, just as you said. Take youtube, it got sold, but does it mean it wasn’t successful? ;)