Small Business Odds

Starting a business is easy. You can legally create a business entity in a few hours with a couple hundred bucks. The hard part is raising capital for growth and keeping the business running long term. It’s a long, hard road and it is not for everyone.

I always encourage would-be entrepreneurs to take the leap and go for it, but before you do you should know what you are up against. Here are a few sobering facts:

• According to the U.S. Small Business Administration, roughly 50% of small businesses fail within the first five years.
• In 2008 627,200 U.S. businesses were born, 595,600 businesses closed and 43,546 filed for bankruptcy.
• Only 2,765 venture capital deals were done in all of 2009.
• A typical venture fund may invest in 1 out of 400 opportunities presented to it.

But it isn’t all bad news. Plenty of small businesses beat the odds, never get funding and have a huge impact on the US Economy. Small businesses:

• Represent 99.7 percent of all employer firms.
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Have generated 64 percent of net new jobs over the past 15 years.
• Create more than half of the nonfarm private gross domestic product (GDP).
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers)