Some interesting "statistics"
#1
While looking at website, consultants, etc. that talk about home based businesses/small business, etc. I came across one of the many that seem extremely dubious. Here are the claims:

40% of American homes have a home based business

The average home based business owner is in the top 2% of the U.S. for income

95% of home based businesses succeed in the first year

The average home-based business household earns nearly twice as much as the average American household

Ok, so what do those "stats" tell us? (Assuming the figures are correct). 40% of the households have home based businesses, and the presumably mean income for those 40% is top 2% in nation (or in the top appx. 6 million people). Let's play with some figures, that are admittedly inaccurate on the conservative side. Let us say that there are 10 million households in the U.S. 40% of 10 million households means that 4 million of those households have home based businesses. Here's where the 'average' figure comes in. Assuming that the average is a 50/50 split, then that means 2 million home based business holders are in the top 2% of income. Given the small number worked with here, it's readily apparent that "average" cannot mean 50/50, despite what the casual observer may notice. (Inflate the figures even 5 fold, and this becomes obvious).

So, what's going on, that this group doesn't say, is that the "average" or mean, is more of a description of a pyramid. With a few having massive income, and the rest being considerably lower. But, the way the webpage packages the fact, that's not what it tries to show.

The 95% statistic is interesting, considering other stats relating ot the start up of business activities. Some how, I believe other statistics more. I admit to being a pessimist, but having researched a business start up of my own (law practice), I have encountered information that business start ups of all types suffer a higher failure average. Some sources place it as high as 80% and others as low as 50%. Whatever the true figure is, the percentage is of little value. What is of value is figuring out why something succeceds or fails.

It seems like this 95% figure is yet another rosy, and manipulated image from a business seeking suckers (er, workers) for its pyramid (er, home based) scheme (er, business).
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#2
Quote:It seems like this 95% figure is yet another rosy, and manipulated image from a business seeking suckers (er, workers) for its pyramid (er, home based) scheme (er, business).

My thoughts on that are that the word succeed means that the business stayed in existence. Not that it turned a profit or even broke even. I'd believe that. If you go through the trouble to start it up you'll stick with it for a year at least before you realize it won't work and it ultimately fails. And if you count some of the part time home business in that figure, where the home business is simply a little side deal like I used to do with building computers for people but was by no means my sole source of income, then yeah those can stick around for years even if you only do 2 jobs a month it's still a home based business. :)


So I agree with you that this looks very much like some fun manipulation to try and convey a picture that while numerically supported is not remotely in line with reality as most people think about it.
---
It's all just zeroes and ones and duct tape in the end.
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#3
Hi,

Quote:While looking at website, consultants, etc. that talk about home based businesses/small business, etc. I came across one of the many that seem extremely dubious. Here are the claims:

40% of American homes have a home based business
Considering all the Tupperware, Mary Kay, Avon, part time real estate agents, computer 'consultants', and other fields, I don't find that hard to believe.

Quote:The average home based business owner is in the top 2% of the U.S. for income
Not sure how to interpret this. 'Average' is modifying 'owner' which is not a numerical quantity, so it has the meaning of 'common or garden variety' rather than 'arithmetic mean'.

Quote:95% of home based businesses succeed in the first year
Gnollguy addressed this quite well. IIRC, something like 85% of start ups fail within three years, but that's not contradictory. People run out of money, enthusiasm, time. or ideas, and the business tanks.

Quote:The average home-based business household earns nearly twice as much as the average American household
Again with the word 'average' modifying a non-numerical quantity ('household' in this case). Not really worth wasting much time on this, but a few seconds of Google Fu gave this. From a table about half way down, the middle fifth earned $34,738 and the top 5% earned $157,176, a factor of more than four. So, is it more than four (clearly the top 2% is going to be higher than the top 5%) or 'nearly twice'.

Quote:Ok, so what do those "stats" tell us?
That the American school system is, on the average, a failure? :P

Quote:40% of the households have home based businesses, and the presumably mean income for those 40% is top 2% in nation (or in the top appx. 6 million people). Let's play with some figures, that are admittedly inaccurate on the conservative side. Let us say that there are 10 million households in the U.S. 40% of 10 million households means that 4 million of those households have home based businesses. Here's where the 'average' figure comes in. Assuming that the average is a 50/50 split, then that means 2 million home based business holders are in the top 2% of income. Given the small number worked with here, it's readily apparent that "average" cannot mean 50/50, despite what the casual observer may notice. (Inflate the figures even 5 fold, and this becomes obvious).
You've fallen into their trap. As I've pointed out above, their use of 'average' is not the numerical definition, but rather as a synonym for 'common'. Doing math on 'common' makes no sense. Like Jabberwocky, it's amusing but meaningless.

--Pete

How big was the aquarium in Noah's ark?

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#4
Quote:As I've pointed out above, their use of 'average' is not the numerical definition, but rather as a synonym for 'common'. Doing math on 'common' makes no sense. Like Jabberwocky, it's amusing but meaningless.

--Pete

Beware the Jabberwock, my son
The jaws that bite, the claws that catch.
Beware the jub-jub bird,
And shun the frumious bandersnatch.

That is from memory though, so I probably mispelled or misquoted. One of the few poems I have memorized, thanks to a middle school assignment to recite a poem.
Jormuttar is Soo Fat...
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#5
Hi,

Quote:the frumious bandersnatch.
"Many parts are edible" -- Larry Niven :lol:

--Pete

How big was the aquarium in Noah's ark?

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