Study Shows Small Business Failure Rates Declining

A report from the Census Bureau shows that the rates of small business failures have declined over recent decades, contrary to what many people assume. From 1977 to 2013, rates of failure went from 12.9% to 9.0%.

The data from the Census Bureau shows spikes in the number of business failures during periods of recession and economic downturns. This is to be expected as consumers slow up on spending and businesses struggle to remain solvent with reduced revenue. However, the increased rates of failure are slowing down with the most recent economic recession in 2009 providing 10.9% of business failures over the 14% in the 1981 downturn.

I don't care if you're launching a new company today, find the third piece.

Arman Sadeghi, Peak Performance Coach, Speaker

What this data shows is that more businesses are succeeding now than in the past. In fact, 99% of all companies in American that have employees are considered small businesses. This information is good news for anyone just starting out or thinking about starting their own business. According to statistics, they have a better chance of survival today than in decades past.

According to business consultant and entrepreneur Arman Sadeghi, business owners can do more to ensure their success by identifying their leadership styles. There exist three leadership styles, according to Sadeghi: the entrepreneur, the operator, and the artist. Each of these three look at the business in a different way.

The entrepreneur is the risk taker and wants to see the business grow and expand. The operator is the manager of the business and weighs all decisions based on maintaining quality and customer satisfaction. The third style is the artist, who focuses on providing an authentic and superior service or product regardless of profitability or customer satisfaction.

When all three styles are combined, the business has the best chance of success. However, business owners only have two main styles. One is the primary style and makes up about 70% of the person’s personality. Another 25% is the secondary leadership style, which can be developed to assume a bigger role. The third style only exists in small amounts in the business owner. Instead, the person with the third leadership style must be found and brought into the business.

“I don’t care if you’re launching a new company today, find the third piece,” says Sadeghi. Having all three leadership styles working together will help ensure long-term success. He advises business owners to expect to clash with the person because they will be looking at decisions in a different way. However, it’s essential to incorporate all three to ensure all decisions are sound and good for the company. As more small businesses succeed in today’s economy, it’s important to have all the pieces in place with the right leadership team.