Small Business Reading Room

Monday, February 28, 2005

Small Business Survival Rates - Update

At Delaware Intercorp we are very concerned with the subject of business survival rates. Our business depends upon our clients success. It is our feeling that the best way to help our clients succeed is to give them all the information they need to make good decisions in the area of incorporation.

I ran across an analysis of employer data from the Survey of Minority-Owned Business Establishments on the Small Business Administration website this morning. This study reports on the four-year survival rates of minority owned businesses in four catagories*;
  • American Indian/Alaska Native owned - 67.0%

  • Asian and Pacific Islander owned - 72.1%

  • Black owned - 61.0%

  • Hispanic owned - 68.6%

All four groups survive at a lower rate than for non-minority owned businesses (72.6%) but the rate of business formation within all four groups was higher than the rate of non-minority owned business formation. I calculate the cumulative increase between 1982 - 1997:

  • Non-Minority formation - 52.8%

  • American Indian/Alaska Native owned - 1098.95%

  • Asian and Pacific Islander owned - 326.19%

  • Black owned - 253.28%

  • Hispanic owned - 394.85%

I will leave the serious analysis of this information to the reader. I do have two observations though;
First, perhaps diversity is a good thing. To be a minority owned business, the majority must be excluded. That would cut down the pool from which to gather qualified owners.
Second, the minority owned business classification is a construct of the Federal Government. It looks like we are succeeding in encouraging the formation of minority owned businesses but even the Government cannot guarantee success in business.

* From the Executive Summary: "The dataset has some significant limitations. First, it only contains information on employer establishments, not firms, which are a better measure of business ownership. Second, it contains no information on establishments that opened after 1997; it only tracks the fortunes of those in existence in 1997.


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Delaware Intercorp, Inc.
113 Barksdale Professional center
Newark, DE 19711-3258

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is Delaware and the best incorporator is
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