From our own research findings and observations, over 85% of companies worldwide do not survive up to 10 years.
In the US, over 700,000 companies shut down every year. In 2020 alone, 1.07 million business establishments opened for the first time, but within the same year 1.02 million establishments permanently shut down, and about 13.1% of the business establishments were startups. (U.S. Small Business Administration, 2023).
- Data sourced from the U.S. Bureau of Labor Statistics (U.S. BLS), this chart shows the surviving establishments based on annual openings from 1994 to 2023, which you may filter the chart by different opening year, and view the number of surviving establishments of the targeted opening year by hovering your mouse over the bars.
- From the selected opening year, the survival rate of private sector establishments is indicated at 100% (number of surviving establishments) because a new dataset is observed and visualized from the selected opening year up to the latest opening year.
- Importantly, the age and survival data of this dataset are measured at the establishment level (not at the firm level), where U.S. BLS used the "date of first positive employment", the year and quarter in which a business reports positive employment for the first time, as the birth date.
- According to U.S. BLS, “an establishment is a single physical location where one predominant activity occurs, such as a firm is an establishment or a combination of establishments”. Therefore, a private establishment refers to a company, firm, cooperative or other society, associations, trust, agency, institutions, organization, union, factory or such other establishments that are privately owned.
Evidently, the business shutdown rate is staggeringly high.
This is why Paul co-founded roiquant (roy - kwant) to help founders reduce risk of business failure and build business defensibility.
In empowering founders to innovate, roiquant's proprietary cloud-based business decision support system is purposefully designed and powered by business failures data, company performance data, capital markets data, historical data, commercial strategies, risk factors, investors database, business tools, simulators, and more, to help founders build valuable and successful businesses.
BUSINESS FAILURE RATE
If failure is referred as failing to see the projected return on investment, then the failure rate is 70% to 80%. However, if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90% to 95%.
WHY ROIQUANT?
Most business studies and entrepreneurial research seem to have a natural tendency to focus on success stories (Madsen & Desai, 2010), and less on failure stories which may result in a survivorship bias that can lead to over-stating or understating the predictability of events (Brown et. al., 1992).
Based on the data gathered by the Global Entrepreneurship Monitor (GEM), researcher Moya K. Mason (2012) estimated that nearly 100 million new businesses are created each year worldwide. However, about 30 to 50 million companies stand a chance to survive within 1 to 5 years of operation.
When you want to build a business with strong competitive edge, but don't have the right knowledge and affordable tools, our affordable business intelligence solution is powered by proprietary quant systems to help you reduce costly mistakes, strategize prudently, innovate creatively, and fundraise strategically.
We understand you value insightful data, intelligent tools, smart capital, and time. Unlike our competitors, our one-stop-shop solution empowers you to make data-informed decisions to improve and innovate your business.
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OUR VISION
Empowering founders to innovate.
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A failure is a man who blundered, but is not able to cash in on the experience. (Elbert G. Hubbard)
