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Startup Company Survival Statistics
October 2014 Inc. Magazine

Startup Company Survival Statistics (October 2014 Inc.) - RF CafeAs reported in the October 2014 edition of Inc. magazine, all the government agency, movie producer, school system, news media, advocacy group, and many other entities', promotions of woman-owned businesses has evidently paid off according to a major study* on the success and failure of startup firms within their first five years of operation. I cannot, out of respect for the copyright, reprint the detailed colorful chart that appears in print, but a thumbnail of it is offered here for reference. Five primary topics were investigated using data collected from the years 2004 through 2009 to determine how they influenced success of failure of startup companies: Gender, Age, Race, Startup Capital, and Intellectual Property (in order, left to right, in the chart). In all cases, group population increases toward the right, and success increases toward the top.

Much to the study's authors' collective expressed surprise, they determined that there was, "no statistical difference of the survival or closure rates between male- and female-led companies." The chart shows that more men than women start businesses, but the success rate is about equal and men actually experience a higher rate of failure within five years. That is truly good news. It would be reasonable to expect since parity has now been achieved in that realm, the preferential treatment of women - and concordantly the accompanying denegation of men - by the aforementioned entities will cease. History shows it will not, though, because of the massive momentum the movement has gained. Demeaning men and boys is acceptable bullying and prejudice - good sport even. Only an aggressive counterinsurgency by men will stop the onslaught against manhood in the business world (and practically every other venue as well). Be offended by my observation if you will, but it is undeniably true.

Also, contrary to perception if you read magazines like Entrepreneur (which I do), startup companies run by people in their 20s are much more likely to fail than those started by older people. Multibillionaire Internet wonders still suffering the scourge of postpubescent acne are by far the exception rather than the rule in business startups. So, if you have a few decades of experience doing what you love, don't be afraid to try starting your own business.

Asians, as it turns out (to nobody's surprise), are more likely to be successful at starting a new business than any other identity group. They are represented by that little blue circle in the upper right in the center chart. By the standards set forth in the female vs. male treatment, Asians can expect to be vilified and punished for achieving success (per standard accusation MO) at the expense of all the other groups. It cannot, per political correctness precepts, possibly be due to the groups' cultural discipline and work ethic.

Startup capitalization is not as much of a determiner of success as many people think. The study indicates that while more cash up front does help, it is not an absolute necessity. Not reported in the excerpt of the study presented in Inc. was the nature of the businesses. That is critical since some business types require a lot more up-front money than others, so this particular bit of data is not overly useful unless it is safe to assume an apples-to-apples comparison amongst business types was used.

Another result of the study is that ownership of intellectual property (IP, i.e., patents and copyrights) has no significant effect on rates of survival or failure. A lot of business ventures do not need legal protection afforded by formal IP registration. Opening an online store for selling reconditioned test equipment does not require the same confidentiality as creating a company that will design and market a game-changing piece of test gear, for instance. Again, criticl information about the nature of the firms might be included in the full study, but with limited access to the authors' insights we have to assume (with a 50-50 likelihood of being correct) that the summary presentation properly accounts for the necessary conditions.



* Source: Susan Coleman, Carmen Cote, Joseph Farhat: "A Resource-Based View of New Firm Survival: New Perspectives on the Role of Industry and Exit Route," as published in the October 2014 edition of Inc. magazine.





Posted  October 7, 2014

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