November 1, 2014

Infographic: The Most Tried and Failed Small Businesses

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If you are running a small business and have been around for any length of time, give yourself a pat on the back. I’ve been running my small business for 16 years now and believe me, I’m thankful each and every day. I especially feel that way after coming across this small business infographic on some of the most tried and failed small businesses.

Did you know that recent studies have shown that 50 percent of small businesses will fail within the first year? How about the fact that a staggering 95 percent will close their doors before they hit their fifth year of operation? That one seems a bit hard to believe but in today’s economy, it could be true. Here are some additional stats that may surprise you:

  • 40% of small businesses are profitable.
  • 30% break even.
  • 30% are continually losing money.
  • 9% have a chance of surviving 10 years.

Now before you get discouraged, keep in mind that many factors go into the success or failure of any small business. A good business plan and strategic marketing and customer service can go a long way toward obtaining success. This infographic by Top Business Degrees seeks to explain why some businesses fail and others flourish.

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David Wallace


David Wallace David Wallace, co-founder and CEO of SearchRank, is a recognized expert in the industry of search and social media marketing. Since 1997, David has been involved in developing successful search engine and social media marketing campaigns for large and small businesses. In additions to his duties at SearchRank, David is editor in chief at Infographic Journal, a blog featuring some today's best infographics and data visualizations.

34 Reactions

  1. The data on small business survival rates is not correct. Close to 50% of small businesses make it 5 years and about 80% make it through the first year.

    Check out these two posts from Scott Shane for better data: http://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.html

    http://smallbiztrends.com/2012/12/start-up-failure-rates-the-definitive-numbers.html

    • Hi Steve, you’re absolutely right — the numbers in the infographic above about business failure rates are incorrect.

      Specifically, the failure rates for small businesses after the first year are around 20% – NoT 50%. After five years the failure rates are roughly 50%, NOT 95%.

      I am actually going to ask the creator of this infographic to update the failure rates to reflect the correct ones.

      – Anita

      • >> After five years the failure rates are roughly 50%, NOT 95%.

        That’s good to know. Yeah, some of the figures here do not match up. I’m glad to know that the 95% rate is incorrect as that was a pretty depressing stat!

    • Very helpful Steve. Thank you. Off hand do you have any such stats for other areas besides the US?

      – Brendan

  2. David, a great article. It’s kind of a wake up call for entrepreneurs. One of today’s small business challenges is the competition for our products and for money. We are competing with every company for a piece of the consumers dollar. Not easy for the little guy. Thanks so much.

  3. Great infographic and post. Lots of good info shared. Thanks.

    Ti

  4. Great Post. Wake up call for small b iz owners indeed.

  5. This article tells me one thing, the push to get people to start businesses to grow our economy is on par with the Bush effort to prop the consumer driven economy, by making too much easy credit available to enable unqualified people to buy homes they could never afford. The result, a global financial crisis, and a lot of foreclosed real estate.

    Let’s stop pushing people who are not really qualified to start companies. It will just lead to economic losses and lots of hard feelings.

    • Hi Ari,

      Why blame President Bush? Failure stats have stayed pretty constant for decades, long before George Bush entered office. And they’ll continue to be roughly the same, long after President Obama leaves office.

      Entrepreneurs take responsibility for their own actions. Many entrepreneurs have failures along with the successes — it’s the nature of the beast. Some entrepreneurs overcome the failures by starting other businesses that may become successful. HJ Heinz, Henry Ford and Walt Disney all had companies go bankrupt, but went on to be incredibly successful with enduring brands. Some entrepreneurs prefer to get a job instead.

      Each person must decide what is right for him or her.

      Most entrepreneurs I know would bristle at the idea that they are somehow being “pushed” and not making their own decisions, however. :)

    • Anita, thanks for challenging Ari. Blaming George W. is becoming old school, and mostly incorrect.

  6. I think this is an important message to all would to be a new business. The concept of being your own boss is flawed because suddenly you have too many bosses – your vendors, customers, financial backers etc., I wonder if the banks financing the business should really look into the feasibility of the business model and track record of the borrower and require them to put more of their own money on line. This may be bad for many of them who may not qualify for the loan but it may be a blessing so that they would not lose their capital and peace of mind for few years as statistics would suggest.

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