Because no reports are required when a
business closes, gathering such data
involves subjective approaches. An
advantage of bankruptcy as the definition
of failure, for instance, is the relative ease
of obtaining data. The disadvantage of
bankruptcy data, however, is its narrow
nature. Restaurants that close for any other
reason would simply not be included—
even for a financial reason, such as failing
to achieve a reasonable income for its
owners or investors.6 On the other end of
the spectrum, the change-of-ownership
definition or “turnover rate” includes all
types of business closures. Consequently,
turnover rates are much higher than bankruptcy
failure rates, regardless of whether
the turnover was due to the owner’s retirement
or due to a change of ownership,
such as when a sole proprietorship adds a
partner.