I read this morning that 50% of all new companies go out of business or liquidate after one year, and 90% go out of business or liquidate within the first 5 years. This article went on to state that 95% of companies that build up a team of more than 8 staff members within the first year will survive the first 5 years of starting the business. This data suggests that bigger is better, and in case you had any doubts about that, the author went on to hammer the point home.
To be honest I have no idea if the presented figures were correct. The SBA and Score figures
that I compared them with were actually more positive--but it is entirely possible the writer was using internationally based statistics. However, if there is one thing I learned during an agonizing semester or two of Probabilities and Statistics, it is that you can pretty much make statistics say whatever you want them to say; it all really depends on the data you choose to include and how you choose to correlate and present it.
At any rate, this author was making a case for his consulting services...so the Doomsday scenario that he presented was, of course, in his own best interest. One of the foundations of marketing both online and offline require that you first define a problem...and then offer a solution, which is exactly what he did.
Personally, I disagree with the notion that you have to start out with a bang and grow quickly. Some may look at that notion as bullish and courageous, and that is well and good if it is a luxury you can afford. I look at it as a risk that the majority of the would-be entrepreneurs out there really cannot afford to take. Now, I do not pretend to be an expert on this, so let me tell you why I believe as I do, at least in the case of many Americans.
Elvis said, "I'm caught in a trap, I can't back out, because I love you too much baby...."
What does that have to do with anything? Well nothing at all if you continue singing the song, but just stop with that part in your mind, and look around you at the Baby Boomers you know intimately or at least well. Quick, how many of them are caring for children or grandchildren, while also caring for ailing parents or a parent that simply retired on social security and cannot make ends meet on their own?
Just in my extended circle of friends and family alone, I know of more than a dozen of these three, and sometimes four, generation family units all living under one roof, or on one main income, with
the Baby Boomer as the lynchpin that is desperately holding it all together by the sweat of their brow and skin of their teeth. No matter what their income level, they are all caught in a trap, and they cannot back out because they love their extended family too much. They may dream of tropical vacations and a less demanding life, but these people have all been unexpectedly hit with the need to be the responsible one taking care of everyone else. They are the very definition of the phrase, “...lives of quiet desperation.*”
Traditionally the caregivers in this trap built of love and necessity are usually thought of as middle-aged women, and the majority are, but in a country where the majority of marriages also end in divorce many are also male. Most of these people need a second income just to make a go of it, and they do not have the time or the luxury of risking it all or starting big. They may be long for wealth when they finally lay their weary heads down for the night, but they would be more than happy to settle for a lifeline and some breathing room. For them, a low-risk, minimal overhead, shoestring operation that can be started in the home, worked on for a few stolen hours each week, and brings in a few extra dollars each month is a heaven sent opportunity.
I personally suspect that it is this very trend, along with rapidly rising prices, that is fueling much of the recent surge in women and minority owned, and online business. After reading the Guru's marketing letter, I hopped over to the U.S. Small Business Administration website and found a few statistics of my own.**
Women in Business
* Women represent more than 1/3 of all people involved in entrepreneurial activity. (Source: Global Entrepreneurship Monitor (GEM) 2005 Report on Women and Entrepreneurship)
* Between 1997 and 2002, women-owned firms grew by 19.8 percent while all U.S. firms grew by seven percent (Source: SBA, Office of Advocacy)
* Women-owned firms accounted for 6.5 percent of total employment in U.S. firms in 2002 and 4.2 percent of total receipts. (Source: SBA, Office of Advocacy)
* The number of women-owned firms continues to grow at twice the rate of all U.S. firms (23 percent vs. 9 percent). There are an estimated 10 million women-owned, privately-held U.S.
businesses.
* The greatest challenge for women-owned firms is access to capital, credit and equity.
* Women start businesses on both lifestyle and financial reasons. Many run businesses from home to keep overhead low. (Source: SBA, Office of Advocacy and Business Times, April 2005)
Minority-Owned Businesses
* Black-owned businesses are the fastest growing segment, up 45 percent between 1997-2002. Revenues generated by the nation's 1.2 million black-owned businesses rose 25 percent between
1997 and 2002 to $88.8 billion in 2002. (Source: U.S. Census Bureau)
* The number of U.S. businesses with Hispanic owners grew at three times the national average from 1997 to 2002 to 1.6 million businesses in 2002, a 31 percent increase from five years
earlier. (Source: MSNBC)
Seniors in Business
* Entrepreneurship among seniors is growing. In 2002, the rate of self-employment for the workforce was 10.2 percent (13.8 million workers), but the rate for workers aged 50 was 16.4 percent
(5.6 million workers).
* Although those age 50 made up 25 percent of the workforce, they comprised 40 of the self-employed.
* Solo business formation in the future will be driven by people who take early retirement or whose jobs just disappear. (Source: AARP/Rand Corp. "Self-employment and the 50 Population")
*Henry David Thoreau's Walden. Chapter 1, Economy.
**Sources: U.S. Small Business Administration, June 2006.
Finding An Entrepreneurial Lifeline In A Life Of Quiet Desperation - To learn more about this author, visit Teresa Bohannon's Website.
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