Stats

  1. Small to Medium-Sized Business (SMB) Failure Rates

    • General Stats (based on U.S. data, but trends are similar globally):
      • 20% of small businesses fail within the first year.
      • About 50% fail by the fifth year.
      • Around 65%-70% fail by the tenth year.

    (Sources: U.S. Bureau of Labor Statistics, SBA reports)
     

  2. Top Reasons Small Businesses Fail
    Here are the most cited reasons (in order of frequency):
    • Poor Cash Flow Management -- Running out of money or poor budgeting.
    • No Market Need -- Product/service isn’t solving a real customer problem.
    • Ineffective Marketing -- Failure to reach and attract enough customers.
    • Poor Business Model -- Pricing issues, unscalable models, operational inefficiencies.
    • Lack of Capital -- Insufficient startup or working capital.
    • Bad Management Team -- Lack of experience or skills in leadership roles.
    • Overexpansion -- Expanding too fast without stabilizing the core business first.
    • Ignoring Customer Needs -- Not adapting to feedback or market changes.
    • Burnout -- Founder exhaustion leading to poor decision-making.
    • Competition -- Underestimating or mishandling competition.

  3. Family Businesses: Survival Rates Through Generations
    The survival of businesses through generations (globally, especially in the U.S., Europe, and parts of Asia) looks like this:

    Generation

    Survival Rate

    Notes

    First to Second~30% survive70% fail or are sold during this transition.
    Second to Third~12% survive88% fail or are sold off.
    Third to Fourth and Beyond~3%-5% surviveVery rare without major transformation.

    (Sources: Family Business Institute, Harvard Business Review)
     

  4. Top Reasons Family Businesses Fail Across Generations
    • Lack of Succession Planning: No clear plan for leadership transition.
    • Family Conflict: Disputes between siblings, cousins, etc.
    • Lack of Interest: Next generation isn't interested or capable.
    • Failure to Adapt: Sticking to outdated models as the market evolves.
    • Ego and Entitlement Issues: Heirs assuming leadership without earning it.
    • Professional Management Gap: Failure to bring in external, non-family expertise when needed.

Quick Summary:

  • SMB Failure Rate: About 50% by year 5.
  • Top Reason: Cash flow and no market need.
  • Family Business Survival:
    • 1st → 2nd generation: 30% survive.
    • 2nd → 3rd generation: 12% survive.
    • 3rd → 4th: 3%-5% survive.