Survival Rates of New Businesses

In class we were asked to look into the survival rates of new businesses. I was able to find a a lot of information on this, but found it most interesting to see some of the international aspects of this data. Here is a brief summary:

US: The US Census Bureau has a huge amount of data, pretty much on any statistic you might want. It also provides some very interesting ways to display this. I found a colored map of the United States where the states to change color based on a given business data as you moved a scroll bar to change the year. It allowed you to see the business trends for all states at once over a wide range of years. I found an artical based on the US Census Bureau data that summrised the survival rates of small busniess from 1992 to 2002 as follows:

1992 - 100 Buisness
1993 - only 75 survived
1996 - only 50 were still in business
2002 - only 29 business remained

I thought that was not bad, only loosing 25% in the first year. I guess that is partly because this data includes all small business types, not just high-tech. I would expect high-tech survival to be much lower.

Canada: Not a good place to start a new business according to the article I read.
First year: only 10% survive (ouch!)
only 25% of those survived another year
36% of those survive past the 5 year point
20% of those make it to the ripe old age of 10 years.

It seems that a start-up business in Canada is not a good deal. Maybe the data is skewed by the article writer, or it was just bad data, but I have not seen any new business out of Canada in quite a while, so maybe its correct.

Internationally: An interesting article from an international business meeting held in Bahrain this last January (must have been before all the political unrest). It stated that internationally about 60% of business survive to 5 years. That seems to jive with the US statics, but indicates that maybe international business have a slightly better survival rate. May be this is because US businessmen might be more willing to take risk and that a lot of that is in high-tech areas that are prone to failure when compared to more traditional businesses (my conjecture, not backed by facts).

Also interesting from the international article is that business are 3 times more likely to merge into a larger corporation than to expand on their own.

Incubated: Lastly I found an article on "Business Incubators". This seems to be in line with what the professor was talking about when he described the concept of "angels" in class. The idea was to provide a safe place for a small business to grow during its first few years. This move the 5 year survival rate from a normal 44% to 87%. It seemed that the "incubating" provider company did well in many cases also. It seems to have a bit of similarity to the old way of doing business with the use of apprenticeships. Maybe what is old is new again, again!