Of every 100 New Zealand businesses that started in 2019, 46 were still trading five years later.
That is Stats NZ's own data, not a scare statistic. It is not all failure either - some owners sold, retired, or simply stopped. But it is the base rate every new founder starts from.
The uncomfortable part is how much of the outcome gets decided before you open the doors.
CB Insights looked at 431 startups that shut down since 2023. Seventy percent had run out of capital - but that is the cause of death, not the disease. Underneath it sat no real product-market fit (43%), bad timing (29%), and unit economics that never worked (19%). Every one of those is testable before the money goes in.
Two habits change the odds. Neither is glamorous.
1. Validate the idea before you fund it
In a randomised trial published in Management Science, founders taught to treat their idea as a hypothesis and test it properly were more likely to walk away from an idea that was not working, and more likely to pivot when it needed pivoting. A later replication across 759 firms found the same pattern.
The value of validation is not a better idea. It is a cheaper no.
2. Write the plan and the budget as one document
Greene and Hopp tracked more than 1,000 would-be entrepreneurs and found those who wrote a formal plan were 16% more likely to reach viability (Harvard Business Review, 2017). Not because a plan predicts the future, but because writing it forces you to answer on paper the questions you would otherwise answer with your own money.
The budget is where most plans quietly fall over. New Zealand small businesses were paid an average of 4.5 days late last quarter - the best result of any country Xero measures, and still money arriving after you needed it. Profitable on paper and empty in the account is a real way to go under.
Where an advisor fits
None of this requires an advisor. Plenty of founders do it themselves.
What an advisor adds is the part that is hardest to do alone: someone with no stake in your optimism, checking the numbers. UK research covering 2015 to 2021 found firms that took external business advice were around 10% more productive than comparable firms that did not.
If you are about to put real money into an idea, the cheapest thing you can buy first is an honest answer about whether it stacks up. Sometimes that answer is no. That is the one worth paying for.
If you would like that answer for your own idea, it is the first step of our Entrepreneur Module.
A note on the evidence
The survival and late-payment figures are New Zealand data. The CB Insights study is mostly US, venture-backed companies, so treat it as direction rather than a local number, and its reasons overlap (which is why they add to more than 100%). The validation trials were run with Italian and European early-stage firms; they show better decisions, not guaranteed survival. The planning and business-advice findings are US and UK respectively - directional for New Zealand rather than conclusive, and the advice study uses matching to reduce, not remove, the fact that firms which seek advice differ to begin with.
Sources: Stats NZ Business Demography (Feb 2025); CB Insights, Why Startups Fail; Camuffo et al., Management Science (2020) and Strategic Management Journal (2024); Greene and Hopp, Harvard Business Review (2017); Xero Small Business Insights; Enterprise Research Centre (Henley, 2024).