Imran's personal blog

May 23, 2012

The chance of business success

Filed under: Uncategorized — ipeerbhai @ 10:16 pm

Hi All,

I was reading the UW business plan competition website today.  They’ve been doing it for 15 years, had 992 teams submit plans.  Over those 15 years — 45 businesses are still in business.  A whopping 0.42%!!

If we just use the “Sweet 16” businesses over 15 years — the finalists — as the base, then 18.8% are still in business.  I bet if we did a temporal regression on this, the numbers would be even worse.

Case Western Reserve did a study of going startups a while ago.  The professor there concluded that 10% of business do not go out of business within 5 years( aka 90% fail ).  31% if it’s a food business.  In other words — restaurants are the most likely to succeed businesses.

UW business plan competition is mixed — some restaurants, some tech start-ups, etc…  It seems that 0.4% is the chance that your idea will become a viable business, and if you do start a business from the idea, about a 20% chance the business will not fail in 5 years.

I was watching a commercial for an invention help line.  This was a company that would take your invention, and help you get a patent and get it onto store shelves.  They showed off a success story.  They had a disclaimer at the end of their ad, “Results not typical”.  Just like a weight-loss ad…

Something to think about…

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