? What is the success rate for start-ups? - Principio Marketing

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WHAT IS THE SUCCESS RATE FOR START-UPS?

Not all companies have the same success rate. It depends on several factors; market demand, stakeholder experience (internal or external), clarity of the company's mission and plan, quality of employees, mobilization, adaptability, innovation, money invested, knowing how to forge strong relationships with suppliers and the field of activity.

In contrast, companies that fail often have the following problems: a customer base that is not diversified enough, financial mismanagement, no contingency plan, ignoring market trends and not being well-surrounded. In Quebec, the business failure rate is in decline, which is good news.

But the basis of this reflection is: what constitutes success? For example, is a company deemed successful when it dominates its sector (RedBull for energy drinks)? Or is success defined as a company having profits and ensuring stable jobs? (Facebook became profitable on a regular basis only in 2009 even if it was dominating its sector well before that, as it started in 2004). So, the very notion of success is difficult to define. That being said, some trends can be observed.

The areas most at risk are accommodation and catering. In Quebec, more than 70% of restaurants close after five years of operation and only 15.3% reach the nine-year mark. Retail is another sector that is at risk. In all sectors, about 51% of companies manage to pass the five-year mark in France. According to a study reported by "Small Biz Trends" in the United States, here are the failure rates by industry:

  • Finance, insurance and real estate 42%
  • Education and health 44%
  • Agriculture 44%
  • Services sector 45%
  • Mining 49%
  • Manufacturing sector 51%
  • Construction 53%
  • Information 63%
  • So if you are thinking of starting a business, do your homework to increase your chances of success. Look at your market and analyze the relationship between supply and demand; is there room for another player? If so, under which conditions? Surround yourself with the best possible ressources, whether they are associates, investors, an incubator, employees or freelancers. You can not succeed alone! Make sure you have a good plan and a good mission. Negotiate good partnerships with your suppliers. Be on the cutting edge of technology and make sure you stay there. Have the financial resources and put in place sound financial management to complete your project. And finally, define what constitutes success for you. Profitability is a good starting point, but it is not the only one. If you don't know where you want to go, how will you know when you get there?

    If you have questions or comments, do not hesitate to contact me. Happy thinking.

     

    Stéphane Elmaleh-Riel, B.Ed., MBA
    Marketing consultant

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    References :
  • http://www.lesaffaires.com/strategie-d-entreprise/pme/les-secrets-derriere-les-entreprises-a-succes-/593997
  • https://www.statista.com/statistics/277229/facebooks-annual-revenue-and-net-income/
  • http://www.lesaffaires.com/strategie-d-entreprise/financement/moins-de-faillites-d-entreprises-au-quebec/569320
  • http://www.dynamique-mag.com/article/cap-trois-cinq-ans-entreprise-epreuve-perilleuse-franchir.6514
  • https://www.bdc.ca/fr/articles-outils/strategie-affaires-planification/gerer-affaires/pages/5-facteurs-cles-5-pieges-eviter.aspx
  • https://www.failory.com/blog/startup-failure-rate

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