Small Business  The Bottom Line on Startup Failures  By Karen E.
Klein Q: Why do so many startups go bust within three years?
What reasons are behind these failures? What makes a successful
startup? -- H.W., London  A: The odds are stacked against
startups: They suffer a disproportionate failure rate in both
boom times and bad. That's the bad news.  The good news: Because
few meaningful statistics exist about small, privately held
companies, the astronomical business-failure rates that we hear
quoted so often tend to be misleading. For instance, a survey
done by the U.S. Commerce Dept. says that of every 10 small
businesses, 7 will survive their first year, 3 will still be
going after 3 years, and only 2 will remain after 5 years.  What
those figures don't tell us is why young businesses fall by the
wayside. The methods for counting business "failures"
overinflate the failure rate because they count lapses in
renewals of business licenses -- as well as bulk transfers or
sales -- as "failures." More detailed r