Based on data from the Ministry of Cooperatives and SMEs and various studies on business survival rates, approximately 50% of MSMEs in Indonesia fail within their first year. This means that out of every 100 newly opened MSMEs, 50 will close before reaching their first anniversary.
Years 2 through 5: Another 30 MSMEs go out of business.
Years 6 through 10: An additional 17 MSMEs fail.
Why Do So Many Fail After the First Year?
Businesses fold due to several key reasons:
• Disorganized Cash Flow: Operational expenses exceed incoming revenue.
• Losing Touch with Market Trends: Products become irrelevant or fail to achieve product-market fit.
• Operational Exhaustion: Business owners suffer from burnout by trying to manage everything themselves without a proper management system.
Regardless of the specific outcome, I believe the root cause is the same: MSME managers and/or owners lack the time to learn because their energy is drained by the complexities of daily operations.
IF IT IS NOT TOO LATE, you should adopt the classic philosophy of “LEARN WHILE YOU EARN.” Ultimately, a leader determines the company’s fate—whether it grows or shrinks—and this depends entirely on the leader’s capacity, vision, and courage.
Johanes Lim, PhD, CPC, CHt (林泰義)
Financial Doctor and Turnaround Specialist for Family Businesses and The BOD Forum Across ASEAN
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