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If you have been part of a start-up company, you probably know that the majority of start-ups fail within their fir...
If you have been part of a start-up company, you probably know that the majority of start-ups fail within their first few years of operation. In year one, that number is 25%. By year three, that number jumps to 44%. By the next year, it’s over half. Because start-ups are so unpredictable, it’s imperative to know which industries have a better chance of surviving through those first few years. Let’s look at a few of the industries that exemplify both start-up successes and start-up failures.
Insurance and Finance start-ups were the most successful by the numbers. This is often because their customers are usually fairly well off and pretty loyal once they select their service. Though the entrance costs are usually very high for insurance companies, recouping that money is almost inevitable if you are in operation for long enough. Consistent customers and working without actually producing a product are both things working in the favour of these industries.
Education and Health are also very successful start-ups. New technology has helped to improve the ways that students can learn, as well as given health providers new ways with which to treat their patients. Customers in both of these industries are usually highly motivated to continue purchasing services (such as improving their SAT scores, or lowering their blood pressure), so while initial costs might be high, revenues are relatively reliable.
Information start-ups are statistically the least successful. That’s probably because new technology has made finding information increasingly easier, and it’s increasingly difficult to provide useful, unique information fairly cheaply. That means these start-ups are spending lots of money to provide information that gets easier to find each year.
Transportation start-ups face difficulty staying afloat as well. That’s because they have a high initial start-up cost, while servicing customers who are generally low income. If these start-ups don’t get off the ground immediately, they are facing an ability to pay back loans or generate capital while looking for customers.