[Elcho]

I find it hard to accept that the majority of small businesses last that long without making an operating profit, 8 years of continuous loss? What bank would accept this?

I'm referring to retail banking which is the norm outside the atypical tech start ups sector of all new entrant small businesses.

I'm assuming that a good chunk of all new businesses started are restaurants, corner stores, dentists & hair dressers etc. Surely it can't possibly be that these guys have to tough out a curve like this/face such a failure rate, which begs the question; if hairdressers can run a small business reliably then why can't a tech company aim to produce value right from the start?

[jcnnghm]

Many businesses aren't funded by banks. They're bootstrapped the entire way. It's not uncommon for a business to lose money for the first few years, it's actually the norm. According to the US SBA, 50% of new businesses fail in the first 5 years.

[vitovito]

That's a misleading statistic because the IRS only allows you claim deductions on a money-losing primary income generator for the first five years.

After that, it's reclassified as a hobby, and you can't deduct for it any more, so businesses either suddenly start submitting tax returns that show they're breaking even or profitable, or they stop submitting them altogether (have "closed" or "failed").