[rossdavidh]

From his own article: "I’m not suggesting the advice the gurus are giving is outright wrong. Their recommendations will make you modestly successful. You’ll more than likely live an OK life and have an above-average net worth."

In fact, Suze Orman and the like are talking exactly to this audience, and their advice is in many cases a lot better than what they are doing now.

Also, being married to a small business owner who knows a lot of other small business owners, there's a "dirty little secret" that this article doesn't mention: most of them never get paid a dime by their own business. They are spending their way through a business loan, or they have family money, or some other source. Yes, there are people who get rich from starting a business, but if popular finance experts told everyone to start their own business, that would be a lot worse advice than what they are saying.

[zhdc1]

> there's a "dirty little secret" that this article doesn't mention: most of them never get paid a dime by their own business. They are spending their way through a business loan, or they have family money, or some other source

Over fifty percent of generic small businesses survive for more than five years, so it's unlikely that a majority of them are completely subsisting on government loans, investors, or family money.

The most common outcome (for the small businesses that last) is to turn into something that creates just enough revenue to support the owner and a handful of employees. The owner takes a small salary and uses the rest of the cash flow for float or reinvests it into the business.

However, depending on the country, tax laws can be fairly advantageous for small business owners (e.g., higher limits on tax-deferred retirement accounts). There's also the benefit of building net worth in the business, which isn't something that employees benefit from. So, while the owner may not be getting paid all that much, they still benefit in a bunch of other ways.

[dionidium]

> However, depending on the country, tax laws can be fairly advantageous for small business owners

My wife is a loan officer at a mortgage company. It's a running joke that it's a pain in the ass to qualify small-business owners, because so many of them claim so little actual income on their tax returns, even when they're quite obviously wealthy.

[ghaff]

Many years ago, I had a small side software business. My revenue would be almost pocket change category for me today and honestly wasn't all that much for the effort I put into it at the time. But one nice thing was that it wasn't even a stretch to bring to income down to just over zero by offsetting various computer and office expenses (in addition to the costs the business incurred directly, which weren't much).

[rossdavidh]

They may well be cheating on their taxes, but they may also in many cases be wealthy in spite of, rather than because of, their small business.

[jstummbillig]

Are you alleging that most small business efforts fail before they make any profit -- as in +50%? That seems rather unlikely but if anyone has strong numbers on that I'd be very interested.

[edoceo]

Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.

[Nasrudith]

That strikes me as eminently unsurprising personally. By definition if you fail then you weren't making enough revenue to sustain it. There are two nasty pitfalls which I have heard often snaring them - either paying for tools and other assets when they lack demand or failing when demand saturated due to being unable to scale up correctly.

Revenue and profit are conflated but are not the same thing.

[rossdavidh]

I cannot say the percentages, but my wife has been shocked to hear from business owners who ran their store for over a decade, that they never made a dime. This kind of confession usually only happens after they have given up and closed. I don't know of any trustworthy numbers on it; I would not be surprised if it was far larger than most people believe, but the difference between businesses that "fail" after two years and ones that last for five years or more, is often how stubborn they are or how much money they have from other sources to keep trying. I would not be surprised if it were over 50%, but I know of no source for strong numbers on it.