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Percent of Small Businesses that Fail


Small businesses are the bedrock of any economy. The biggest contribution to a country’s GDP from any particular category of businesses or industry is made by small businesses. Besides, small businesses support communities and local initiatives in a much more engaged manner than the corporate giants or the socio-cultural and nonprofit organizations.

While there are a lot of positive attributes about a small business and it can also facilitate the fulfillment of a person’s dream, it has more chances of failing than becoming a success. A large business is more likely to survive than a small business. Businesses with fewer that twenty employees have a measly 37% chance of surviving the first four years. The same likelihood drops down to a nerve-wracking 9% when the time is stretched to ten years since inception. In addition to that long term problem, half of all small businesses fail in the very first year and a whopping 95% of all small businesses fail in the first five years. Neither is getting started easy nor is keeping a small business alive simple.

Most Tried and Failed Businesses

1. Independent restaurants have a high chance of failing and this is not a premonition, it has been proven by history. The independent restaurant industry has a staggering 60% failure rate. Most people open up restaurants because they are passionate about it, know how to cook and love to serve delicious dishes to people. What they don’t know or are less trained in is business. They work wonders in the kitchen and may even come up with a great diner or café, yet they would not be able to manage the business. Lack of marketing, competition and high cost of running the business just to keep it open takes a toll on the company’s fortunes and eventual viability.

2. Retail stores also face a similar misfortune. It costs a lot of money to open up a retail store where there is a lot of footfall or traffic. Even if one manages to open up a store in such a location, competition would kill it. If one chooses some other location, then lack of footfall or poor awareness among public would kill the prospects.

3. Direct sales businesses are third on this list of most tried and failed small businesses. It is extremely difficult to survive in the direct sales business and since there are several thousands of people contemplating the same at the same time, the world is extremely rough out there.

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