Anyone heard the adage that 9 in 10 start-ups will fail? Who would be crazy enough to launch a company against such odds.Recent research from the Chicago Booth School of Business tested the common view that only one in ten start-ups survive. They found this failure rate a myth. Without even going into the variables which would improve a start-up’s chances of success, they focused only on the numbers, literally how many businesses survived their first five years, and they looked across a number of industry sectors, from restaurants to tech.

Myth Busting. Their research showed that no industry suffered anywhere near a 90% failure rate. Five year survival rates ranged between 36% and 51% across a broad swath of industries. It didn’t matter whether there were low barriers to entry, high capital costs, product vs. service. While certainly risky, starting a business has never been a daunting odds-defying, reality denying act. Interestingly, the Booth researchers realized that a start-up’s chances of success did improve if the business was created as the country was coming out of a broad economic crisis or a sector was pulling out of disfavor. “Companies that entered the market in 2011 – following a period of years that saw more start-up failures than successes – fared well across many industry sectors.” In fact, their research showed that the average success rate during such rebuilding periods exceeded 50%.

Tech Ain’t Special. Tech start-ups didn’t experience dramatically different survival rates. For “professional, scientific and technical services” companies that were established in 2011, according to the Booth researchers, their 5 year survival rate has been 45.2%. Sure, this is a worse survival rate than other industry sectors, but hardly the valley of death.

Now What? By design, the Booth researchers didn’t spend time analyzing variables that would increase a start-up’s chances of success. We all know that a great idea without a great team will not an enterprise make. Neither will ignorance of the competitive landscape, denial of innovative disruptions, indifference to customer insight… The point of the Booth research was to dispel the myth that the odds of success are stacked 9 to 1 against it, even if an enterprise has capital, a compelling product or service, a highly functional team and clamoring customers. Such statistics may not mean much to the impassioned entrepreneur, but they should to the rest of us who need to cheer them on.

With more than 30 years’ experience in law and business, Newt Fowler, a partner in Womble Carlyle’s business practice advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He chairs the Board of TEDCO and serves on the Board of the Economic Alliance of Greater Baltimore. Newt can be reached at nfowler@wcsr.com.