Comments on: Small Businesses Destined for Failure

By: How risky is starting your own business?

How risky is starting your own business? — Fri, 29 Jan 2010 13:55:29 +0000

[...] is not a lifestyle choice for everyone. Certain people are destined for business failure.� However, it is unfair to gloss entrepreneurship as a riskier investment choice. It is risky if [...]

By: Thicken My Wallet » Blog Archive » How risky is starting your own business?

Wed, 27 Jan 2010 08:47:56 +0000

[...] is not a lifestyle choice for everyone. Certain people are destined for business failure.� However, it is unfair to gloss entrepreneurship as a riskier investment choice. It is risky if [...]

By: Nelson

Nelson — Fri, 14 Aug 2009 19:21:05 +0000

Hmmm… I guess you’d have to get a bunch of people buying them for both scenarios. (failure and success) Set it up that so many people have to “invest” before the contract becomes valid. Whoever ran the market could charge a premium per contract to cover the costs of the operation. The higher risk the market percieves the more the contract would cost and vice versa. The payouts would come from the profits made from selling the contracts in the first place.

I’m no expert in the derivatives market by any means, but I think this could actually work. Anyone who knows what they’re talking about want to weigh in?

By: Gina Carano on Strikeforce Links Edition | Financial Independence in Your 20s | Studenomics

Fri, 14 Aug 2009 16:27:23 +0000

[...] Pillars discusses the failures of many small businesses. The interesting take home point is that at the end of the day a business is sales [...]

By: Mr. Cheap

Mr. Cheap — Thu, 13 Aug 2009 21:57:08 +0000

Nelson: I think it’d be a very enticing idea too, but I have no idea what a market like that would look like. Who would be selling the contract? If it was the owner themselves, they’d a) be highly motivated to stay in business until the contract expired & b) be unwilling to tie cash up to pay out the contract when / if they did close up shop.

By: Thicken My Wallet

Thicken My Wallet — Thu, 13 Aug 2009 21:55:06 +0000

If you read the D & B report, it claims (from memory) that one of the leading causes of business failure (which I include as forced termination rather than complete broke bankruptcy only) is bad management.

You are 100% correct. A good chunk of my friends are entrepreneurs (like attract like) and the ones who do well love their business and project it. The ones who struggle leapt into a business not because they loved it but because it was “hot” (everyone seems to be designing apps for smart-phones but how many people love that space?) and they resent the business because they realize they have to spend tons of time on something they don’t love.

The modern issue with customer service is that everyone is so thin-skinned on both sides of the table. If you ever have a chance go to Singapore and see how they school North American customer service. At hotels, they have photos of all their guests and every morning, staff are briefed on who is staying at the hotel and to greet them (as Mr. or Miss not “hey you”). Shocks the crap out of you the first time they do it but its very respectful and humbling.

By: Nelson

Nelson — Thu, 13 Aug 2009 21:37:24 +0000

I’m more interested in the concept of a futures market for betting on the success of small businesses. It would be a perfect way for small business owners to hedge their risk- buying a futures contract that pays them x amount of dollars if they go out of business in a certain amount of time. Plus speculators like Mr. Cheap could go into the market and attempt to predict the downfall (or success) of various ventures.

Feel free to add that to the list of wacky business ventures.

By: Mr. Cheap

Mr. Cheap — Thu, 13 Aug 2009 21:18:53 +0000

Henry: I suspect you’ve hit the nail on the head. They cast the net pretty wide what is considered a “business” (since the 4% figure was taken from government data, it’s probably pretty broad).

By: Henry

Henry — Thu, 13 Aug 2009 21:10:19 +0000

I think it really depends what you mean by small business. A lot of contractors are sole proprietors. Does that mean they really own their own “sole proprietorship” business? In many cases, sole proprietorship can be highly successful to due to the support of an established business or corporation.

If you factor contractors who own a “sole proprietorship” business, the success rate of small business should be quite high.

By: Dividend Growth Investor

Dividend Growth Investor — Thu, 13 Aug 2009 16:29:57 +0000

Hmm I think that the interpretation that few businesses fail is misleading. It takes a look of the number of failures and compares it to the total number of businesses, and is not really looking at how long these businesses were operational for.

I could say that 1.5 mln new businesses were added and .8 million closed shop. I would say that at least 50% of new businesses would close shop somewhere from 1 to 5 years from the opening..