L'évaluation des jeunes sociétés

If every business starts with an idea, young companies can range the spectrum. Some are unformed, at least in a commercial sense, where the owner of the business has an idea that he or she thinks can fill an unfilled need among consumers. Others have inched a little further up the scale and have converted the idea into a commercial product, albeit with little to show in terms of revenues or earnings. Still others have moved even further down the road to commercial success, and have a market for their product or service, with revenues and the potential, at least, for some profits.

1. Employment: While there are few studies that focus just on start-ups, there is evidence that small businesses account for a disproportionate share of new jobs created in the economy. The National Federation of Independent Businesses estimates that about two-thirds of the new jobs created in the recent years have been created by small businesses, and that start-ups account for a large share of these new jobs.

3. Economic growth: The economies that have grown the fastest in the last few decades have been those that have a high rate of new business formation. Thus, the US was able to generate much more rapid economic growth than Western Europe during the 1990s, primarily as a consequence of the growth of small, new technology companies. Similarly, much of the growth in India has come from smaller, technology companies than it has from established companies.

2. Small or no revenues, operating losses: The limited history that is available for young companies is rendered even less useful by the fact that there is little operating detail in them. Revenues are small or non-existent for idea companies and the expenses often are associated with getting the business established, rather than generating revenues. In combination, they result in significant operating losses.

3. Dependent on private equity: While there are a few exceptions, young businesses are dependent upon equity from private sources, rather than public markets. At the earlier stages, the equity is provided almost entirely by the founder (and friends and family). As the promise of future success increases, and with it the need for more capital, venture capitalists become a source of equity capital, in return for a share of the ownership in the firm.

This census contains information on more than 8.9 million U.S. businesses in both the public and private sector. Using a seven-year database from 1998 to 2005, the authors concluded that only 44% of all businesses that were founded in 1998 survived at least 4 years and only 31% made it through all seven years. In addition, they categorized firms into ten sectors and estimated survival rates for each one. Table 1 presents their findings on the proportion of firms that made it through each year for each sector and for the entire sample:

Proportion of firms that were started in 1998 that survived through