Infographic: how businesses fail/are failing

[c1ue]

Interesting points from this SBA data:

1) Numbers of businesses closing 50% higher each year from 2007-2009 vs. 2005
2) Consumer spending lower in 2009 than 2005
3) Delaware (where I'm going tomorrow) has a 22% business failure rate. No doubt due to its US corporate haven status and large financial institution presence.

[thriftyandboringinohio]

Re: Infographic: how businesses fail/are failing

Fascinating, thanks for posting it.
This type of data is easy to manipulate to support a given editorial point.

Small businesses are notorious for failing in the first couple years. With the economy bad, I expect more small businesses than normal to start by mid career professionals unemployed and taking a crack at a business. I would also expect even a higher percentage of failures for those new reluctant/desperate startups. I'd like to see that info carefully scrubbed to show only small businesses after year 5, results unclouded by infant mortality.

For the chart about retail closings they show 7 companies and five of them are sellers of videos and books, a dying industry becoming obsolete due to downloads. The other two are a fried chicken stand and a mall jewelry store chain, hardly bellweathers both.

I'm as big a fan of doomer porn as anyone, but this report seems a little forced and contrived.

[c1ue]

Re: Infographic: how businesses fail/are failing

Small businesses are notorious for failing in the first couple years. With the economy bad, I expect more small businesses than normal to start by mid career professionals unemployed and taking a crack at a business. I would also expect even a higher percentage of failures for those new reluctant/desperate startups. I'd like to see that info carefully scrubbed to show only small businesses after year 5, results unclouded by infant mortality.

A good point, but the small business failure rate skyrocketed in 2007 - well before the 'Financial Crisis' began.

And in 2007 - while the real estate bubble had peaked, the bubble aftermath was only 6 months into its cycle by the end of that year.

[c1ue]

Re: Infographic: how businesses fail/are failing

As I was just in Delaware - and Delaware is the 'biggest loser' in terms of SBA failures, I thought I'd ask around as to why/if there are so many failing small businesses.

A summary:

1) Delaware was heavily dependent on the financial firms. A specific example: MBNA after its acquisition by Bank of America. MBNA was based in Delaware, but after the acquisition - in addition to consolidation of branches, the entire corporate managemen of MBNA was either eliminated or moved to North Carolina (BofA headquarters).

2) Another major factor is the auto industry. Delaware had 2 large auto plants: Chrysler in Newark which is now shut down, and a GM plant in the Boxwoods which was purchased by an electric car company called Fisker. The people in the Boxwoods area are hopeful but thus far very little of the former GM jobs replaced.

http://earth2tech.com/2010/05/06/ele...nding-to-175m/

Fisker Automotive, an electric vehicle maker backed by venture capitalists including Kleiner Perkins, is getting awfully close to the $1 billion funding mark, putting it in a rare class of greentech firms that includes thin film solar maker Solyndra. According to a filing today, Fisker Automotive has boosted its latest equity funding round to $175 million, and has already raised $100 million of that. The company is backed by Kleiner Perkins, A123Systems and Ace Investments., and also lists Quantum Technologies on this latest filing.

Update: In another filing, a group called Fisker Holdings, which is backed by the same investors (probably an affiliate formed to raised funding) says it is in the process of raising equity, options and securities worth $232.71 million, and has already raised $202 million of that. We’re waiting to hear more from Fisker on Fisker Holdings and how much the company has raised in total.
Fisker announced it had raised $115 million back in January, and this latest equity funding bump of $175 million to Fisker Automotive adds to the $529 million in loans from the federal government and $21.5 million in loans from Delaware (coming close to $800 million in total). If Fisker has added on another $200 million (we’re double-checking this) then that means the company has really hit the $1 billion mark.

3) Besides the above as top job suppliers, there were a large number of ancillary businesses started in the 2003-2005 time frame due to incentives by local governments (example: south Market street in Wilmington) which were understandably impacted by the above 2 factors as well as general economic trends.