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To: Amy J who wrote (25509)	11/30/2004 12:19:32 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

OT Yes, I've known these stats for a while. It's safe to say most businesses fail, as you point out the majority in the beginning, but the rest after a ten years or so. Most small businesses don't outlast the founder or the first generation they get handed down to. A few last 50 or 100 years. About ten years ago I met an employee's sister who happened to be an accountant. What was never lost on me was that her specialty was getting small business people out of their failing businesses. When your small biz starts to fail, because of all those personal guarantees you signed with the bank, you can't just put a pad lock on the door and walk away. She said sometimes it would take five years or more for people to be able to extract themselves without losing all the personal assets they'd acquired. (These stats are probably a lot worse now after the bust, maybe 1/2 out of 10, because the figures were based upon a study completed in the 90s before the bust but also before the boom.) Years ago when my own biz was fairly young and struggling, I had a supplier who dealt with far larger companies than mine. One older salesman there treated me like I was their best customer which surprised me so I asked him why it was that with all his more important customers, he treated me so well. He said, "Guys like you stay in business because you start out small you pay for everything with your sales rather than credit, you watch all the expenses and you worry most about quality." Then he said that guys who come in here with a lot of borrowed money buying all kinds of equipment want to sell it back to you in six months because they never develop a way to make money with the stuff they buy. That people like me have no choice but to arrange my business in such a way that leads to profit. This is why businesses started in recessions or difficult times have a higher success rate than those started in a boom. You can't get loans so you are forced to create your own financing internally. More businesses fail from the negative effects of too much easy money rather than tight money which forces you to make good decisions. Think about all those dot bombs which had all that WS money thrown at them early on. Some might have had great ideas behind them, but they were killed by money (or by their competitors having too much money they didn't need to earn). Even business owners that have amassed a fortune can lose it through wasteful spending. The classic is the guy who does really well using the above formula (self financed growth) and then sells out for big bucks. A year or two later he realizes that he is bored to death playing golf every day so he decides to start biz number two, in maybe something that they have always wanted to do like run a golf shop or a restaurant. But now the dynamic is completely different, they have money to spend and spend it they do until the losses are too high to ignore and they close it up or move back to a smaller house. Very few entrepreneurs are able to do a second act. Mostly they just find a way to get rid of the money they amassed in the first. Large companies do this as well. Their core biz is a cash cow and when it reaches it's natural grow limit, they then start to acquire a lot of other non-core businesses that suck out cash from the core. Peter Lynch used to call this "de-worsification". They buy these other companies with great fanfare and a few years later you see the write downs and spin-offs.

To: Amy J who wrote (25509)	11/30/2004 1:06:08 PM
From: fatty	Read Replies (2) \| Respond to of 306849

>Specific to only high-tech, only 2 out of 10 startups that will make it. (These stats are probably a lot worse now after the bust, maybe 1/2 out of 10, because the figures were based upon a study completed in the 90s before the bust but also before the boom.) Are you sure about this? Did you mean make it to IPO? I have worked for a number of startups over the past 10 years, most of them are not so promising, but I'd say all of them somehow survived either as an independent company or as a subsidary of a larger one. I have yet to work for one that totally failed.