Small businesses are having a rougher time succeeding in America than ever before. While there are several factors causing the decline, the overall belief is that new technology, and decreased loans from funding institutions are hurting the small business economy. In comparing small businesses today to the mid 90s, the Bureau of Labor Statistics’ Business Employment Dynamics reported that “the number of businesses surviving past the first year has dropped from 569,419 in 1994 to 106,789 in 2016.” That is a decrease of about 80%.
On the bright side, according to statistics about 50% of businesses are likely to make it to their 5th year of business. The biggest issue for failed organizations seems to be access to revenue, as 82% sited cash flow problems as the crux that ended their business. In addition location and industry play a huge part on a company’s success as well. California has 4 of the top 5 cities where small businesses are most likely to fail (the othe is in Pennsylvania), while the Food service industry, i.e. restaurants are the hardest to steer in the right direction. The biggest chances of failing lie in the Transportation and Construction industries, while Health care and social assistance are 2 fields most likely to succeed.
In the end building a good team and focusing on your customers is crucial to the success of any business. Although less companies are being started today than in the past 30 years, there are still opportunities for many entrepreneurs to establish themselves.