SBA statistics and so on are meaningless, because startups are such a small proportion of small businesses generally.<p>I have no idea where the rule of thumb that 9 out of 10 startups fail comes from, but it doesn't sound too far off. IIRC about a third of companies that raise series A from VC funds fail, and most startups that fail do it before getting VC funding, not after.
The first answer atm is terrible, switching failure rates to success rates within one paragraph.<p>I've said it here a few time, the 9/10 number is total nonsense propagated because people like to think they're special for lasting.<p>It's never, ever, ever, ever, ever, ever been that high, it was made up in a NYT article 10 years ago and been repeated without any challenge in startup circles for far too long.<p>Worse still 'failure' rates often include people who have sold their business for massive profits or have shut the business down after making profit, neither failures, in fact successes.<p>So while you are pretty special for starting a business, you're not that special for still being in business in 5 years time. It's actually pretty common.
The best answer is the one from Christoph Möller, who points out it's really that roughly speaking for every 10 startups, roughly:<p>A) 3 will fail outright<p>B) 3 will return less than the invested capital<p>C) 3 will return the investied capital<p>D) 1 will be highly successful and make investing in all 10 startups highly worth while.<p>I've heard slightly different breakdowns about categories C and D. which are sometimes called the "living dead", and point out of the 1 (or sometimes 2) that actually have a successful exit, only 1 in 100 have an amazingly successful exit such as Google.<p>The bottom line is that success or failure metrics vary greatly whether you are talking about it from the perspective of the VC, the founder, or the employees who just want to have food with their meals.<p>The employees might not consider a "living dead" outcome to be a failure, and depending on the founder's motivations if the "living dead" startup is providing some great service and he or she is more passionate about providing that service as opposed to becoming rich beyond the dreams of all avarice, a founder might not mind all that much either. A good example of this is Cygnus Support, which was technically in the "living dead" category for a decade before the Red Hat acquisition.
I can see how a statistic like that could apply to someone's first business, where they don't know what they're doing. After a while you learn to suck less at running a business, hopefully before the money runs out.<p>When I first started I hated sales, hated salespeople, hated marketing. That is not healthy for a business person looking to succeed. I had to become the salesguy and the marketing guy early on. Later I had learn how to manage people and conflicts (internal and external). If this is something you can't or don't want to do, then maybe starting a business isn't for you. If working long hours, not necessarily getting paid, having a fairly stressful job and worrying about being able to pay the mortgage in the beginning don't phase you then ignore the phrase completely and go for it.
I believe it.<p>Especially since many of the startups I see these days are not long-term businesses. Their only hope for success is to be bought out by a bigger company, which doesn't happen very often.