And with the commonly-held old saw that nine out of ten new businesses close in the first five years, no time like retirement! Actually, no one really knows where this statistic comes from, but it is pretty easy to disprove. It was a matter of a couple of clicks to find this, from the US Small Business Administration:
Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years. Survival rates were similar across states and major industries. Bureau of Labour Statistics data on establishment age show that 49 percent of establishments survive 5 years or more...
Koreans feel pretty much the same way about owning a business, I ruminated as I dined in 노리노리 Nori Nori, one of the twenty small businesses that occupy the ground floor of my officetel, most of them mom-and-pop affairs. I wondered what the success rate of Korean start-ups is, especially considering their seeming ubiquity.
A DongA Ilbo story yesterday had this:
The National Tax Service said the number of self-employed in Korea was 4.8 million people last year, or 20 percent of the economically active population. Among them, 1.2 million or 26 percent are in 30 business areas, including restaurants, clothing stores and bars, so they inevitably face cutthroat competition. Nevertheless, 35 percent of the 930,000 people who launched businesses last year did so in the 30 areas. People who wish to open a business can find out how competitive the intended business area is by referring to the tax authority’s Web site. Opening a venture in highly competitive sectors could worsen the serious problems of the self-employed.
And a Reuters story from July 20, 2010:
The ratio of South Korea's newly started companies against failed entities in June rebounded from a one-year low with an increase in new business registration, data from the central bank showed on Tuesday.
The business start-up/failure ratio rose to 58.6 last month versus 47.6 in May, which was the lowest since May 2009, according to a Bank of Korea statement.
A total of 5,448 companies were launched in June, up from 4,565 the preceding month.
But nothing definitive about overall continuance rates of Korean small businesses. Icidentally, the title of the DongA story I referred to above is "Chicken War":
No, not that one! The one where Lotte Mart is selling fried chicken for 5,000 W per pack, thus driving the small retailers nearby out of business. Or so they are claiming. The article points out, though, that the move is analogous to E-Mart's recent foray into the pizza business. E-Mart's half-price pizzas "are known to have caused a sales drop of under 10 percent at neighborhood pizzerias, so the impact of the Lotte chicken might not be significant." Personally, I remain unconvinced that a sales drop approaching 10% is "not significant".
I also remain unconvinced about the quality of the E-Mart pizza, mainly because I haven't had one yet. The are so popular you have to sign up a day ahead in order to get one. They smell pretty good when I walk by, though.
Like it will when you pass by Smokin' Steve's.