The most start-up friendly business sectors
Thursday, May 29, 2008/
New businesses in the education and health sectors in the US are most likely to still be operating successfully four years after starting up, a business academic argues.
Business professor Scott Shane at Case Western Reserve University in Ohio writes on Small Business Trends that research shows businesses in different sectors have dramatically different survival rates.
One 2005 study looked back at the mortality rate US businesses founded in 1998. It found that 55% of businesses in the education and health services sector made it past the four year mark, the highest of any sector. The worst performing sector was information technology, where just 38% of businesses survived.
The up-side for all businesses, however, is that they are much more likely to survive if they can just make it past their first year. Research conducted by the US Small Business Administration shows that 25% of US business founded in 1992 were gone by the end of their first year; a further 11% dropped off the next year, then 8%, and progressively less as the years roll on.
After 10 years, the study found only 29% of the businesses started in 1992 were still operating – however no clear distinction appears to have been made between businesses that failed.
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