Link to Hustlelife.net and original article: https://hustlelife.net/startup-failure-rate-statistics/
Every year, hundreds and thousands of highly-determined and ambitious entrepreneurs lay the foundations of several new businesses.
Most of these entrepreneurs have dreams in their eyes and emit rays of positive energy. But did you know that in the following four years, almost half of them would vanish as they never existed?
While plenty of small businesses fail to survive in the business world, a handful of them make it past this critical period and continue to thrive. How many of such businesses are there among the survivors?
Which industries provide the highest/lowest chances of startup success? What are the reasons why small businesses fail to grow? Keep reading to find out.
Building your very own startup requires a lot of courage, determination, and skill. It takes years of constant struggle and hard work before a startup can be declared as established.
Catching on some of the most interesting startup statistics can help you take better decisions for your business. Some of these facts have been mentioned below.
As far as small business industries are concerned, their rate of growth is multifactorial and dependent on several factors. Taking all these factors into consideration, the following top ten businesses have been nominated as the fastest-growing industries in the U.S. according to their growth rates (sales percentage) in the year 2018.
Amidst the countless industries of different types, it is difficult for one to decide which one to opt for. Statistics that measure the percentage of startup success according to the type of industry can come handy in such situations.
Here are the top ten industries with the highest chances of success on the basis of their net profit margin (NPM):
While it is important to know about the list of businesses with the best startup, it is equally significant to keep an eye on Industries with the least chances of succeeding.
According to Sageworks, here is a list of top ten industries with the worst startup statistics is mentioned below on the basis of NPM:
Oil and Gas Extraction: -6.9% NPM
Software Publishers: -5.1% NPM
Beverage Manufacturing: -3.7% NPM
Semiconductor and Other Electronic Component Manufacturing: -0.3% NPM
Forging and Stamping: 0.4% NPM
Farm Product Raw Material Merchant Wholesalers: 0.9% NPM
Beer, Wine, and Distilled Alcoholic Beverage Merchant Wholesalers: 2.1% NPM
Petroleum and Petroleum Products Merchant Wholesalers: 2.8% NPM
Grocery Stores: 2.2% NPM
Bakeries and Tortilla Manufacturing: 2.3% NPM
It is important to determine the future of entrepreneurship with respect to different fields. This will help decide people which businesses to prefer in the upcoming future. The statistics regarding the most promising industries in 2019 are mentioned below:
Around 55% of the small business owners believe artificial intelligence to be the most promising industry in 2019.
Around 30% of the small business owners believe big data to be the most promising industry in 2019.
Around 25% of the small business owners believe cybersecurity to be the most promising industry in 2019.
Around 25% of the small business owners believe life science to be the most promising industry in 2019.
Around 25% of the small business owners believe digital health to be the most promising industry in 2019.
Money is among the key factors required to lay down the foundation of a small business. The statistical facts mentioned below provide interesting information about the financial views of small business owners in different contexts:
About 52% of the small business owners in the U.S. expect venture capital to be their next source of funding.
About one-third of the small businesses require less than $5000 to initiate.
58% of small businesses require a budget of less than $25000 to start.
65% of the small business owners admit that they lack sufficient budget to lay the foundation of a startup.
93% of the small business owners said they calculated a potential run rate of shorter than 18 months.
Financing is possibly the most important factor to take into consideration while initiating a business startup. Research has shown that the type of funding preferred by the business owner immensely affects its rate of success.
Mentioned below is the list of some popular financing methods that were adopted by most small business owners in the year 2018.
Extensive research has been performed to categorize the individuals starting their personal businesses on smaller scales. These individuals have been categorized on the basis of gender, ethnicity, age range, education, and reason for starting the business.
25% of the small business owners are females
73% of them are males
On the basis of education, the statistics are as follows:
High School: 33%
Bachelor’s Degree: 29%
Master’s Degree: 16%
On the basis of ethnicity, the statistics are as follows:
White and/or Caucasian: 71%
African American: 7%
On the basis of age group, the statistics are as follows:
50-59 years: 35%
40-49 years: 25%
60-69 years: 18%
30-39 years: 14%
18-29 years: 4%
70+ years: 4%
On the basis of the reason behind a startup, the statistics are as follows:
While many new small businesses make their way into the market every year, a much larger amount of them is wiped away. For some, this occurs shortly after their establishment while for others, it takes a few years.
Following are the statistics regarding the failure of small businesses according to years
The most common reasons why small businesses fail to flourish are mentioned below.
The failure of a small scale business often has something to do with its owner. Mentioned below are some of the common character faults found in the owners whose business fail to flourish.
The concept of entrepreneurship has gained excessive popularity in the last few years. It has significantly improved the overall economy of the world by improving efficiency by lasts technologies, presenting new problems to the solutions, and exchanging ideas on a global level. In order to quantify the trend of entrepreneurship on the basis of the country, it is important to understand the concept of Global Entrepreneurship Index.
The Global Entrepreneurship index or GEI refers to a composite indicator that describes the current health of the entrepreneurship ecosystem in a given area. The GEI does not only measure the quality of entrepreneurship but also analyzes the depth and extent of the supporting entrepreneurial ecosystem.
According to GEI, the top countries of entrepreneurship have been mentioned below as per their region.