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36
STRATEGY

Middle-Aged Spread
 

How old is the average small company -- and how much time does it have left?
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Small Business 2001

Every year, hundreds of thousands of new companies open for business and hundreds of thousands close their doors for good. Decades ago economist Joseph Schumpeter coined the term creative destruction to describe that endless cycle.

However, it's worth remembering the backdrop for all that churning: a surprisingly stable business population. Although starting a business is a high-risk endeavor, millions of small companies stay in operation each year. Among companies with employees, only about 9% a year have closed their doors in recent times. A solid nucleus of companies end up staying in business for at least a decade. According to figures compiled by the research firm Cognetics --

  • Nearly half of the companies in the United States have been in business for at least 15 years.
  • Just over four-fifths have been in business for more than 5 years.
  • The median age of U.S. companies is about 12 years.

Companies that endure
U.S. businesses are surprisingly stable when you consider how many have been in operation more than five years. And well-established small companies account for the vast majority of small-business employment.

The 2001 State of Small Business issue


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Last updated: May 15, 2001




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