The statistics surrounding the survival rate for small businesses have long been subject to fervid debate. Depending on who you're talking to, the predicted life span for a startup can elicit grim to cautiously optimistic responses. One commonly cited figure is that half of all businesses go under in the first year while 95% fail within the first five years. According to a study done by the Small Business Administration, two-thirds of all new small business survive the first two years but only 44% will still be operating by year four.]
Common culprits for failure include undercapitalization, cash-flow crises, and overexpansion. Then of course there are a host of external factors that nobody can predict—let alone adequately plan for—such as volatile credit markets and unstable economic cycles.