Recently, the Tyra Banks Show did an episode on the income of women in various careers including a few high earning small business owners. Banks posed a question to her audience asking if they had any idea of the number of small businesses that fail. The number to the surprise of the audience was 80%.
The show producers and Tyra had good intentions, I believe, by informing people that business ownership can pay well but the risks are great. But as I have mentioned in previous blog posts, the 80% failure rate for small business is simply misinformation.
The Tyra Banks Show has unintentionally dissuaded more people from the possibility of starting a small business. Not everyone will be swayed by the scary figures. In an article Debunking Small-Business Myths, writer Shannon McRae addresses the failure myth and how Vicky Carver and Michelle Ward left full-time jobs to start their own business but has some reservations about being poor. McRae stated,
"Had the pair believed the myth that most businesses don't--or can't--survive the early years, they might still be sitting in their dead-end jobs today. But fortunately, Carver had a knack for sales and Ward had a head for business--a winning combination that has driven their transportation firm to be on track for $13 million in sales this year."
It's unfortunate that fiction becomes fact by constant misinformation. From entrepreneurial schools, business training programs, consultants and media (myself included) we have fallen for the 80% failure rate. It's easy to assume a "fact" is trustworthy when it's stated on a popular show or other media. The so-called failure statistic is an urban myth with no credible source of research. Studies focusing on failure rates deemed failures as business closures which could be due to any reason including selling the business, mergers, and owners simply bored and closing shop.
I have tried to do my part in dispelling this myth by trying 4 times to send an email to the Tyra Banks Show producers informing them of the misinformation but my email wouldn't go through the website contact form. The small business failure myth may never end but with others like McRae spreading the truth, we may just help a few more people build the courage to make the plunge into entrepreneurship.
It is unfortunate more don’t try their hand at starting up a small business – these entrepreneurs create a disproportionately large share of jobs and GNP growth.