Why do 80% of startups fail?

Guest · Posted: Mon Sep 26, 2005 9:15 am Post subject: Why do 80% of startups fail?

I am struggling to find some good books on why most businesses fail? I
suppose nobody wants to talk about or admit failure, hence so few books
on the subject. Is there any online article? Or what are your thoughts?

Scott T. Jensen · Guest

<el_roachmeister@yahoo.com> wrote:
Quote: I am struggling to find some good books on why most
businesses fail? I suppose nobody wants to talk about
or admit failure, hence so few books on the subject. Is
there any online article? Or what are your thoughts?

80%? That's being generous. The most common numbers I hear are 90% to 99%.
;-)

There are quite a few books on why businesses fail. The classic and still
best is "The E-Myth" by Michael Gerber.

Scott Jensen
--
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Get it answered at Boarding School Forums.
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John A. Weeks III · Guest

In article <11jf1tebatoslfa@news.supernews.com>,
"Scott T. Jensen" <stj@charter.net> wrote:

Quote: el_roachmeister@yahoo.com> wrote:
I am struggling to find some good books on why most
businesses fail? I suppose nobody wants to talk about
or admit failure, hence so few books on the subject. Is
there any online article? Or what are your thoughts?

80%? That's being generous. The most common numbers I hear are 90% to 99%.

What is equally interesting is that the biggest single success
factor in the small number of new businesses that do reach 5
years is that that founder/owner has 5 or more years hands-on
experience in the business prior to starting a new business.

-john-

--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================

Scott T. Jensen · Guest

"John A. Weeks III" <john@johnweeks.com> wrote:
Quote: "Scott T. Jensen" <stj@charter.net> wrote:
el_roachmeister@yahoo.com> wrote:
I am struggling to find some good books on why most
businesses fail? I suppose nobody wants to talk about
or admit failure, hence so few books on the subject. Is
there any online article? Or what are your thoughts?

80%? That's being generous. The most common numbers
I hear are 90% to 99%.

What is equally interesting is that the biggest single success
factor in the small number of new businesses that do reach 5
years is that that founder/owner has 5 or more years hands-on
experience in the business prior to starting a new business.

That doesn't surprise me. There are other interesting stats.

Whereas 90% of all businesses fail, only 10% of all franchisees do. Like
your stat, they succeed because of business experience doing that business
.... but in the franchisee's case, it is the franchisor's experience and
their success-proven system of running their business. This is why
franchisors are so fanatical about franchisees following their system to the
letter ... and they should.

A study found that if a business entrepreneur spent less than six months
working on their business plan, they had a 90% failure rate. If they spent
six months or more on their business plan, they had a 90% success rate.
This too is related to your stat in that the success factor was the owner
thinking for a good deal of time about their business and how to make it
successful. As a consultant, this is one of the first questions I asked
when I was brought in to help a sick business. In all my years, never did I
encounter a sick business owner who had spent six months or more working on
their business plans. And it was so VERY common that some of the sick
businesses that were really simply terminal (a.k.a. there was nothing I
could do to save them) was started on impulse. They jumping at a "golden"
oppurtunity ... resulting in them finding out that it was Fool's Gold they
jumped for.

Scott Jensen
--
If you can read this, thank a teacher.
If you're reading this in English, thank a soldier.

Guest · Guest

Scott T. Jensen wrote:
Quote:
There are quite a few books on why businesses fail. The classic and still
best is "The E-Myth" by Michael Gerber.

Thanks for the suggestion, I just ordered it from audible.com . It is 8
hours so hopefully will stay interesting.

Dan · Guest

el_roachmeister@yahoo.com wrote:
Quote: I am struggling to find some good books on why most businesses fail? I
suppose nobody wants to talk about or admit failure, hence so few books
on the subject. Is there any online article? Or what are your thoughts?

See 80/20 rule.

mw · Guest

What I want to know is how any business survives in today's economy?
It's not so fascinating why they fail. It's difficult to find good
employees, there's a ton of competition for products and services that
are already mainstream, it's difficult to sustain a business promoting a
new product or service, large companies like Home Depot and Walmart
treat little vendors like dirt and throw them away when they're done...

In spite of all that, I'm still an optimist. However, it is more
difficult for small businesses today to survive when you have
megalomarts for every conceivable industry that drive prices, profits
and patronage down.

Hey maybe I could write a book on the subject?
mw

el_roachmeister@yahoo.com wrote:
Quote: I am struggling to find some good books on why most businesses fail? I
suppose nobody wants to talk about or admit failure, hence so few books
on the subject. Is there any online article? Or what are your thoughts?

Guest · Guest

I see each "megalomarts'" as a bloated and inefficient system that is
too far removed from the customer. For each dollar they spend, probably
90% goes into their overhead while only 10% goes into the widget that
the customer actually cares about. This is why I see them as tremendous
oppurtunity for a small business owner to tackle.

Guest · Guest

Also, what is the definition of a business failure? Does it mean the
owner would have done better ROI with their money in the bank? Or does
it mean the owner simply closed the business and moved on to something
bigger and more profitable?

Wayne Sallee · Guest

Those numbers are quite streched. If 90% went to overhead,
and only 10% went into the products that they sell, then
thier overhead would be increadable.

I think you need to reexamine those numbers.

Also considering percentage of product sales, Anyone
noticed how empty the shelves are at walmart grocery
section each night at 9:00pm. My local Walmart moves a
huge amount of groceries. The shelves are so emptied each
day. I hate shopping that late because the shelves are so
emptied (and messy too). It's like Home Depote Lumber
section, just before a hurican. Ok maybe not quite that
bad :-) That's a lot of product.

Wayne Sallee
Wayne's Pets
Wayne@WaynesPets.com

el_roachmeister@yahoo.com wrote:
Quote: I see each "megalomarts'" as a bloated and inefficient system that is
too far removed from the customer. For each dollar they spend, probably
90% goes into their overhead while only 10% goes into the widget that
the customer actually cares about. This is why I see them as tremendous
oppurtunity for a small business owner to tackle.

Guest · Guest

el_roachmeister@yahoo.com wrote:
Quote: Also, what is the definition of a business failure? Does it mean the
owner would have done better ROI with their money in the bank? Or does
it mean the owner simply closed the business and moved on to something
bigger and more profitable?

it may go as far as that the owner has to sell their home to get
out from under the debt, or worse, get foreclosed. We didn't go
that far, but we got close.

I'm very reluctant to put any more money into my current business
than I have already gotten out of it. i.e. it's got to make the
money first before I'm willing to put it back into it. It's doable,
but the growth is very very slow.

Maren
Tropical seeds - Job's Tears Jewelry - Plants & Lilikoi
http://www.jach.hawaii.edu/~maren/palms_etc/

Gordon Woolf · Guest

el_roachmeister@yahoo.com wrote:
Quote: I am struggling to find some good books on why most businesses fail? I
suppose nobody wants to talk about or admit failure, hence so few books
on the subject. Is there any online article? Or what are your thoughts?

FAILURE OVER RATED FOR SMALL BUSINESS is the title of a press release
you can find at:

http://www.worsleypress.com/media/sisrelease.pdf

--
Gordon Woolf
gcwnet.net
author of: Success in Store -- How to Start or Buy
a Retail Business, Enjoy Running It and Make Money
www.worsleypress.com

Wayne Lundberg · Guest

<el_roachmeister@yahoo.com> wrote in message
news:11kuilk201ri37f@news.supernews.com...
Quote:
I see each "megalomarts'" as a bloated and inefficient system that is
too far removed from the customer. For each dollar they spend, probably
90% goes into their overhead while only 10% goes into the widget that
the customer actually cares about. This is why I see them as tremendous
oppurtunity for a small business owner to tackle.

Nothing can be further from the truth. The margins these Wal-Marts and the
like work on is about 12%... that is, they buy for ten dollars FOB their
store and sell for $11.20 and with this dollar twenty they pay rent, wages,
light, parking lot, security and stockholders. Now.... can you do better
than that? If so, you have the makings of a business.

Wayne
For a complete course on entrepreneurship, already paid for by the
California taxpayers, go to www.pueblaprotocol.com

Quote:

Guest · Guest

You are probably right about Walmart, but what companies like Ford, i.e
a company producing only a few highly technical widget.