A widely held perception that most small businesses are doomed to fail in their infancy was this week attacked at a conference on small and medium-sized enterprises (SMEs) in Wellington.
David Tweed, of Massey University's Business College, gave fresh information on what he called a "myth" of SME research -
that 80 per cent fail in the first five years.
While looking at the longevity of 1500 New Zealand SMEs last year, he was amazed to discover 75 per cent of the businesses were still operating seven years after the study began.
"It does call into question the blanket statement that going into business is risky and you're likely to fail," he said.
"At the very least, we should be able to say once you've been going for a year your chances of still being there five years on are actually really good."
Tweed's findings appear at odds with research released by the Ministry of Economic Development last year, which found only 38 per cent of businesses with one to five employees had survived since 1998.
The figure rose to 51 per cent for businesses with six to nine and 10 to 19 employees.
Tweed questioned the ministry's methods and the definitions used in its research.
"That research may count companies that have changed names, addresses or ownership as failures."
He hoped his findings would contribute to a more optimistic attitude towards SME start-ups.
Last year, ministry figures showed SMEs made up 97 per cent of all enterprises in New Zealand and employed about 42 per cent of the fulltime equivalent workforce.
