Before you read any further in this column, answer the following question: What is the annual revenue of a typical start-up six years after founding?
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Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.
8 Reactions
JL
Shane,
Thank you for sharing these uplifting numbers.
Data is important, and it’s really important that future small business owners are aware of the negative possibilities, too.
I feel that technology will move these numbers up in the next few years, as the cost of doing some types of business go down, thus increasing owners profits, even if their sales remain about the same.
The Franchise King
While some may think this is depressing, it goes to show that being typical won’t make you successful. You have to be unique and different to truly stand out and succeed.
Scott,
Just a comment on the premise of your article, that “revenues” [for startups]are below average. What a business has for revenue in and of itself is almost irrelevant! It’s what you get to keep that’s important.
More specifically the real problem for startups is a lack of understanding of “Cash Flow.” Accurately projecting Cash Flow is at least half the battle to growing a successful business.
Martin Lindekskog
Scott,
What do you think is the real problem with these statistics and how do you think you could solve this problem in the future?
Bob E Sherman
I hate to break the bubble of my Republican friends, but I’m willing to bet that the number of “small businesses” that net one million dollars is miniscule.