New Report on New Business Survival Rates

From the Office of Advocacy of the SBA:
“Released at The Institute for Entrepreneurship, Leadership, and Innovation at the Howard University School of Business, findings of Dynamics of Minority-Owned Employer Establishments, 1997-2001 include:
– During 1997-2001, 27.4 percent of non-minority owned establishments expanded. At the same time, 34 percent of Hispanic-owned establishments expanded, 32.1 percent of Asian and Pacific Islander-owned establishments expanded, 27.8 percent of American Indian and Native Alaskan-owned establishments expanded, and 25.7 percent of Black-owned establishments expanded.
– The four-year survival rate for non-minority owned businesses establishments was 72.6 percent. The survival rates for minority-owned businesses were lower, including Asian and Pacific Islander-owned at 72.1 percent, Hispanic-owned at 68.6 percent, American Indian and Native Alaskan-owned at 67 percent, and Black-owned at 61 percent.”
I have two observations on this study. First, the public policy implications should focus on improving educational programs for these groups. Previous studies clearly show the power of education in improving survival rates in business start-ups. While I’d love to have them all come to Belmont, effective educational programs can be as simple as focused as workshops on planning and starting a business sponsored by local Chambers of Commerce, banks or community groups.
Second, these survival rates are phenomenal! Most studies from years past showed survival rates for new businesses in the 40-50% range. In entrepreneurs who have gotten training we tend to see 80-90% survival rates. This is the first study of the general population that finds survival rates in the general population of 60-70%. While this could be a measurement issue (this sample is drawn from census data), it could also mark a general improvement in survival due to better awareness overall about small business, more widespread access to information on managing new businesses, and/or a healthier economic and social climate for business survival.