80% of New Employees Fail Within the First 5 Years

August 19th, 2005 by Steve Pavlina

Have you heard the statistic that says, “80% of new businesses fail within the first five years?” That seems to be a favorite one for people to cite when attempting to discourage their friends or co-workers from starting a new business (with the best of intentions of course <- yes, this is sarcasm). Sometimes you’ll hear variations on this statistic like 75% or 90%. I heard another one that said that of the 20% of businesses that don’t fail within the first 5 years, 80% of those fail within the next 5 years. So that puts us down to only 4% that last 10+ years (20% x 20%). Now can anyone tell me what percentage of employees fail within the first five years? If you work at a job and get laid off after 4.5 years, would you qualify for this statistic? What if you quit? Left for a better job? Retired? Got a transfer? A promotion? If your job ends, does that mean you failed? And if a business “fails” to endure, does that mean the entrepreneur failed? Isn’t every business going to fail eventually? Even Microsoft? <- no, this is not sarcasm. If a business fails to endure, does that mean it could be considered a failure? Does “fail” mean that the business produced nothing of value or provided no revenue to the owner(s)? What if an employee is hired and then “fails” after a number of years? Does that mean s/he did nothing the whole time and shouldn’t have been hired in the first place? Of course not… Don’t let goofy statistics discourage you from going the entrepreneurial route if you find it attractive. While a business or a job may cease to endure after a certain number of years, that doesn’t mean it wasn’t worth doing. You’re still going to learn and grow and create value along the way, regardless of the outcome. Just as a job can be a stepping stone, so can a business, and there’s no reason you can’t start a new business with the expectation that it’s only temporary. Jobs and businesses come and go. Your own personal growth is what endures. My first and only stint as an employee lasted six months. My first business lasted 11 years and is still going. Go figure.

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