The new venture mortality myth

Studies show that in the world’s advanced economies, new businesses do not suffer a high failure rate. Probably the most comprehensive cross-national set of new business survival rates (or more correctly, one year persistence rates) has been collected by the OECD Entrepreneurship Indicators Programme. For example, in 2005, over 80% of enterprises that entered an OECD country’s official records in one year were still recorded as persisting to the next year.  Five-year persistence rates are just over 50%, on average. Is this a high or a low failure rate? Let’s compare this to job tenure. 

Studies show that the median life of a typical new enterprise in an annual cohort, at around five years, is longer than the median tenure of a new job in Canada or the UK, and around the same as the median spell in self-employment in the US…. Read more.

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