1.22.2005

Success Rates For Small Business

I often read Dane Carlson's Business Opportunities Weblog and the other day I found a post that linked to a site called BizStats.com
This site has Business Risk Index that evaluates the survival and failure rates of over 27,000 industries and business segments. This report covers only sole proprietorships excluding farming. You can access various reports and prior year rankings. I happened to review the year 2001 results and found a few rankings that seem to be inconsistent from much of the pomp and circumstance used in biz-opp presentations. I will include a link to the report I have read so you can view the entire survey group but here are some of the keys I noticed.

Rank


Type of Business

Industry
Type

Number of businesses % with net income % with net losses
1 Surveying services Services 15,598 99% 1%
129 Direct Sales & Multi-level marketing Retailing 922,517 49% 51%
143 Catalog & mail order operations Retailing 45,355 18% 82%

According to this survey, Direct Sales & MLM are slightly worse than a 50/50 proposition. I think this segment result is somewhat overstated because it includes Direct Sales businesses that may or may not be MLM derived. Companies that compensate ONLY by retail commission should greatly improve the income performance.

Note also that Catalog & Mail Order Operations are ranked at 143. This is dead last in this study.

Isn't this contrary to much we have heard about the efficacy of the catalog-based business model? Could this possibly explain some of the reasons why catalog sales value within the MLM environment offers the least amount of profit potential for the in-field associate?

I began to examine more current reports but could not locate corresponding references. Either these categories were folded into other business segments or fell off the list within the study group.

The Safest & Riskiest Small Businesses - 2001

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