Written by Dave Lavinsky
Starting a business is an exciting journey, but the numbers tell a sobering story. While entrepreneurship is the backbone of innovation and economic growth, the reality is that not every startup survives.
Did you know that over 21% of new businesses fail within their first year? And by the five-year mark, more than half will have closed their doors.
But why do some businesses thrive while others struggle?
Our data dives deep into startup survival and failure rates across different industries, states, and timeframes, uncovering crucial insights for entrepreneurs, investors, and business strategists. Here’s a sneak peek at some of the most eye-opening statistics:
By analyzing decades of data, we aim to shed light on the patterns behind startup success and failure, helping entrepreneurs make smarter, more informed decisions. Whether you’re launching a new venture or scaling an existing one, these insights will provide a data-driven perspective on what it takes to succeed.
Now, let’s dive into the numbers.
21.3% of startups fail within the first year.
32.3% of new businesses fail during the first 2 years.
39.8% of new businesses fail during
the first 3 years.
50.7% of new businesses fail during the first 5 years.
66.1% of new businesses fail during the first 10 years.
Tech startups have the highest business failure rate at 63%.
60% of startups fail between the pre-seed and Series A funding stages.
HealthTech startups have failure rates of up to 80%.
EduTech startups have failure rates up to 60%.
Businesses established in the information sector have a 1-year failure rate of 27.6%.
Information Sector businesses’ 3-year failure rate: 49.7%.
Information Sector businesses’ 5-year failure rate: 60.9%.
Information Sector businesses’ 10-year failure rate: 75.3%.
Information Sector businesses’ 15-year failure rate: 82.7%.
Technology Industry Overall: 63% failure rate within 5 years.
25-30% of VC-backed startups still fail despite extra funding.
90% of disruptive startups fail.
Only 6% of startups featured on the TV show, Shark Tank, fail.
There is a 95% failure rate for Blockchain and Cryptocurrency startups.
14.6% of Agriculture, Forestry, Fishing and Hunting companies fail within the first year.
16.8% of Health Care and Social Assistance companies fail within the first year.
16.8% of Real Estate and Rental and Leasing companies fail within the first year.
17.2% of Accommodation and Food Services companies fail within the first year.
17.5% of Manufacturing companies fail within the first year.
17.3% of Other Services (except Public Administration) companies fail within the first year.
17.3% of Management of Companies and Enterprises companies fail within the first year.
17.6% of Educational Services companies fail within the first year.
20% of Finance and Insurance companies fail within the first year.
18.5% of Arts, Entertainment, and Recreation companies fail within the first year.
21.4% of Mining, Quarrying, and Oil and Gas Extraction companies fail within the first year.
21.4% of Professional, Scientific, and Technical Services companies fail within the first year.
22.8% of Administrative and Waste Services companies fail within the first year.
23% of Construction companies fail within the first year.
24.2% of Information companies fail within the first year.
14% of small businesses fail by ignoring customers.
29% of small businesses fail due to running out of cash.
18% of small businesses fail due to pricing and cost issues.
23% of small businesses fail due to having the wrong team.
42% of small businesses fail due to a lack of market need.
14% of small businesses fail due to poor marketing.
17% of small businesses fail due to poor product offerings.
29% of startup failures are due to funding issues.
24% of small businesses fail due to misreading market demand.
23% of startup failures are due to weak founding teams.
Source: U.S. Bureau of Labor Statistics
Total Private Companies | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 78.7% | 21.3% |
2 Year Survival Rate | 67.7% | 32.3% |
3 Year Survival Rate | 60.2% | 39.8% |
5 Year Survival Rate | 49.3% | 50.7% |
10 Year Survival Rate | 33.9% | 66.1% |
1 Year Survival Rates by Sector | Survival Rate | Failure Rate |
---|---|---|
Agriculture, Forestry, Fishing and Hunting | 85.4% | 14.6% |
Retail Trade | 84.3% | 15.7% |
Real Estate and Rental and Leasing | 83.2% | 16.8% |
Health Care and Social Assistance | 83.2% | 16.8% |
Accommodation and Food Services | 82.8% | 17.2% |
Other Services (except Public Administration) | 82.7% | 17.3% |
Management of Companies and Enterprises | 82.7% | 17.3% |
Manufacturing | 82.5% | 17.5% |
Educational Services | 82.4% | 17.6% |
Arts, Entertainment, and Recreation | 81.5% | 18.5% |
Finance and Insurance | 80.0% | 20.0% |
Mining, Quarrying, and Oil and Gas Extraction | 78.6% | 21.4% |
Professional, Scientific, and Technical Services | 78.6% | 21.4% |
Administrative and Waste Services | 77.2% | 22.8% |
Construction | 77.0% | 23.0% |
Information | 75.8% | 24.2% |
Total | 78.7% | 21.3% |
2 Year Survival Rates by Sector | Survival Rate | Failure Rate |
---|---|---|
Agriculture, Forestry, Fishing and Hunting | 77.8% | 22.2% |
Retail Trade | 74.2% | 25.8% |
Health Care and Social Assistance | 73.6% | 26.4% |
Real Estate and Rental and Leasing | 73.2% | 26.8% |
Other Services (except Public Administration) | 73.0% | 27.0% |
Management of Companies and Enterprises | 72.9% | 27.1% |
Educational Services | 72.7% | 27.3% |
Accommodation and Food Services | 72.3% | 27.7% |
Manufacturing | 72.0% | 28.0% |
Arts, Entertainment, and Recreation | 70.8% | 29.2% |
Finance and Insurance | 69.1% | 30.9% |
Professional, Scientific, and Technical Services | 67.1% | 32.9% |
Mining, Quarrying, and Oil and Gas Extraction | 66.9% | 33.1% |
Administrative and Waste Services | 66.1% | 33.9% |
Construction | 66.0% | 34.0% |
Information | 62.9% | 37.1% |
Total | 67.7% | 32.3% |
3 Year Survival Rates by Sector | Survival Rate | Failure Rate |
---|---|---|
Agriculture, Forestry, Fishing and Hunting | 71.5% | 28.5% |
Health Care and Social Assistance | 66.9% | 33.1% |
Retail Trade | 66.5% | 33.5% |
Management of Companies and Enterprises | 65.6% | 34.4% |
Other Services (except Public Administration) | 65.6% | 34.4% |
Real Estate and Rental and Leasing | 65.5% | 34.5% |
Educational Services | 65.4% | 34.6% |
Accommodation and Food Services | 64.6% | 35.4% |
Manufacturing | 64.1% | 35.9% |
Arts, Entertainment, and Recreation | 62.5% | 37.5% |
Finance and Insurance | 61.4% | 38.6% |
Professional, Scientific, and Technical Services | 59.0% | 41.0% |
Mining, Quarrying, and Oil and Gas Extraction | 58.6% | 41.4% |
Administrative and Waste Services | 58.3% | 41.7% |
Construction | 58.2% | 41.8% |
Information | 54.1% | 45.9% |
Total | 60.2% | 39.8% |
5 Year Survival Rates by Sector | Survival Rate | Failure Rate |
---|---|---|
Agriculture, Forestry, Fishing and Hunting | 61.9% | 38.1% |
Health Care and Social Assistance | 56.2% | 43.8% |
Management of Companies and Enterprises | 55.3% | 44.7% |
Retail Trade | 55.2% | 44.8% |
Educational Services | 54.7% | 45.3% |
Other Services (except Public Administration) | 54.3% | 45.7% |
Real Estate and Rental and Leasing | 54.1% | 45.9% |
Accommodation and Food Services | 53.4% | 46.6% |
Manufacturing | 52.8% | 47.2% |
Finance and Insurance | 50.7% | 49.3% |
Arts, Entertainment, and Recreation | 50.3% | 49.7% |
Professional, Scientific, and Technical Services | 47.4% | 52.6% |
Mining, Quarrying, and Oil and Gas Extraction | 47.0% | 53.0% |
Administrative and Waste Services | 47.0% | 53.0% |
Construction | 47.0% | 53.0% |
Information | 41.8% | 58.2% |
Total | 49.3% | 50.7% |
10 Year Survival Rates by Sector | Survival Rate | Failure Rate |
---|---|---|
Agriculture, Forestry, Fishing and Hunting | 45.5% | 54.5% |
Management of Companies and Enterprises | 42.6% | 57.4% |
Health Care and Social Assistance | 40.1% | 59.9% |
Retail Trade | 38.7% | 61.3% |
Educational Services | 38.3% | 61.7% |
Accommodation and Food Services | 37.5% | 62.5% |
Other Services (except Public Administration) | 37.3% | 62.7% |
Manufacturing | 36.8% | 63.2% |
Real Estate and Rental and Leasing | 36.2% | 63.8% |
Finance and Insurance | 35.8% | 64.2% |
Arts, Entertainment, and Recreation | 32.1% | 67.9% |
Mining, Quarrying, and Oil and Gas Extraction | 31.4% | 68.6% |
Administrative and Waste Services | 31.3% | 68.7% |
Professional, Scientific, and Technical Services | 30.9% | 69.1% |
Construction | 30.2% | 69.8% |
Information | 25.4% | 74.6% |
Total | 33.9% | 66.1% |
Accommodation and Food Services | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 82.8% | 17.2% |
2 Year Survival Rate | 72.3% | 27.7% |
3 Year Survival Rate | 64.6% | 35.4% |
5 Year Survival Rate | 53.4% | 46.6% |
10 Year Survival Rate | 37.5% | 62.5% |
Administrative and Waste Services | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 77.2% | 22.8% |
2 Year Survival Rate | 66.1% | 33.9% |
3 Year Survival Rate | 58.3% | 41.7% |
5 Year Survival Rate | 47.0% | 53.0% |
10 Year Survival Rate | 31.3% | 68.7% |
Agriculture, Forestry, Fishing and Hunting | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 85.4% | 14.6% |
2 Year Survival Rate | 77.8% | 22.2% |
3 Year Survival Rate | 71.5% | 28.5% |
5 Year Survival Rate | 61.9% | 38.1% |
10 Year Survival Rate | 45.5% | 54.5% |
Arts, Entertainment, and Recreation | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 81.5% | 18.5% |
2 Year Survival Rate | 70.8% | 29.2% |
3 Year Survival Rate | 62.5% | 37.5% |
5 Year Survival Rate | 50.3% | 49.7% |
10 Year Survival Rate | 32.1% | 67.9% |
Construction | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 77.0% | 23.0% |
2 Year Survival Rate | 66.0% | 34.0% |
3 Year Survival Rate | 58.2% | 41.8% |
5 Year Survival Rate | 47.0% | 53.0% |
10 Year Survival Rate | 30.2% | 69.8% |
Educational Services | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 82.4% | 17.6% |
2 Year Survival Rate | 72.7% | 27.3% |
3 Year Survival Rate | 65.4% | 34.6% |
5 Year Survival Rate | 54.7% | 45.3% |
10 Year Survival Rate | 38.3% | 61.7% |
Finance and Insurance | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 80.0% | 20.0% |
2 Year Survival Rate | 69.1% | 30.9% |
3 Year Survival Rate | 61.4% | 38.6% |
5 Year Survival Rate | 50.7% | 49.3% |
10 Year Survival Rate | 35.8% | 64.2% |
Health Care and Social Assistance | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 83.2% | 16.8% |
2 Year Survival Rate | 73.6% | 26.4% |
3 Year Survival Rate | 66.9% | 33.1% |
5 Year Survival Rate | 56.2% | 43.8% |
10 Year Survival Rate | 40.1% | 59.9% |
Information | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 75.8% | 24.2% |
2 Year Survival Rate | 62.9% | 37.1% |
3 Year Survival Rate | 54.1% | 45.9% |
5 Year Survival Rate | 41.8% | 58.2% |
10 Year Survival Rate | 25.4% | 74.6% |
Management of Companies and Enterprises | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 82.7% | 17.3% |
2 Year Survival Rate | 72.9% | 27.1% |
3 Year Survival Rate | 65.6% | 34.4% |
5 Year Survival Rate | 55.3% | 44.7% |
10 Year Survival Rate | 42.6% | 57.4% |
Manufacturing | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 82.5% | 17.5% |
2 Year Survival Rate | 72.0% | 28.0% |
3 Year Survival Rate | 64.1% | 35.9% |
5 Year Survival Rate | 52.8% | 47.2% |
10 Year Survival Rate | 36.8% | 63.2% |
Mining, Quarrying, and Oil and Gas Extraction | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 78.6% | 21.4% |
2 Year Survival Rate | 66.9% | 33.1% |
3 Year Survival Rate | 58.6% | 41.4% |
5 Year Survival Rate | 47.0% | 53.0% |
10 Year Survival Rate | 31.4% | 68.6% |
Other Services (except Public Administration) | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 82.7% | 17.3% |
2 Year Survival Rate | 73.0% | 27.0% |
3 Year Survival Rate | 65.6% | 34.4% |
5 Year Survival Rate | 54.3% | 45.7% |
10 Year Survival Rate | 37.3% | 62.7% |
Professional, Scientific, and Technical Services | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 78.6% | 21.4% |
2 Year Survival Rate | 67.1% | 32.9% |
3 Year Survival Rate | 59.0% | 41.0% |
5 Year Survival Rate | 47.4% | 52.6% |
10 Year Survival Rate | 30.9% | 69.1% |
Real Estate and Rental and Leasing | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 83.2% | 16.8% |
2 Year Survival Rate | 73.2% | 26.8% |
3 Year Survival Rate | 65.5% | 34.5% |
5 Year Survival Rate | 54.1% | 45.9% |
10 Year Survival Rate | 36.2% | 63.8% |
Retail Trade | Survival Rate | Failure Rate |
---|---|---|
1 Year Survival Rate | 84.3% | 15.7% |
2 Year Survival Rate | 74.2% | 25.8% |
3 Year Survival Rate | 66.5% | 33.5% |
5 Year Survival Rate | 55.2% | 44.8% |
10 Year Survival Rate | 38.7% | 61.3% |
Depending on your type of business, labor costs can account for as much as 70% of total business costs.
The average salary for entrepreneurs in the US is currently $77,231 as compared to the average annual average salary of $63,795 for all job participants.
The average salary for self-employed individuals in the US is currently $84,305.
21% of owners started their business from scratch.
The most successful entrepreneurs are middle-aged; the mean founder age for the 0.1% of fastest growing new ventures is 45 years old.
The average age of tech startup founders is 45.
A 50-year-old startup founder is 2.8 times more likely to found a successful startup as a 25-year-old founder.
A 60 year old is 3x as likely to build a successful startup than a 30 year old in 2023.
The average entrepreneur is 44 years old.
6% of entrepreneurs have just a high school diploma.
Gen X (47%) comprises the largest segment of small business owners followed by Baby Boomers (37%), Millennials (16%), Gen Z (0.5%) and Pre-baby boomers (0.5%).
Democratic-affiliated business owners decreased by 10% since 2021, and current account for 19% of business owners.
Republican-affiliated business owners decreased by 9% since 2021, and currently account for 42% of business owners.
Libertarian affiliation among business owners increased by 14% since 2021, and currently account for 7% of business owners.
Owners who feel disconnected from political parties increased by 22% since 2021, and currently account for 32% of business owners.
17.7% of all employer firms are minority-owned.
17% of business owners are immigrants.
20% of all U.S. businesses are owned by people of color.
25% of small business owners are women.
75% of small business owners are men.
76% identify as White or Caucasian.
5.19% identify as Black or African American.
4.83% identify as Asian or Asian American.
Entrepreneurs of color started businesses due to desire to be own boss (57.58%), dissatisfaction with corporate America (45.45%), and passion pursuit (33.33%).
4.70% identify as Hispanic, Latino, or Spanish Origin.
Most popular industry for BIPOC entrepreneurs: retail (17.35%).
Top three business priorities for entrepreneurs of color: increasing staff (49.49%), growing/remodeling (46.46%), investing in digital marketing (39.39%).
Entrepreneurs of color identified a combined happiness level of somewhat or very happy (67.67%).
There was a 34% increase in African-American owned firms between 2007 and 2012.
Minority-owned firms increased by 38% between 2007 and 2016.
There was a 46% increase in Hispanic-owned businesses between 2007 and 2012.
Asian entrepreneurs run 10% of all U.S. businesses, making them the second largest racial or ethnic group.
Between 1996 to 2018, native-born business founders decreased, while immigrant entrepreneurs more than doubled.
Minority business enterprises created over 4.7 million jobs in the last 10 years.
In 2019, women in America started an average of 1,817 new businesses per day.
Women of color own half of all female-owned businesses in the U.S.
The rate of female”entrepreneurs” grew almost twice as fast as the total growth of female entrepreneurship.
In 2019, female-owned businesses earned an average of $142,900 compared to $474,900 for all privately held businesses.
1.25 million of the 3 million businesses in Texas are women-owned.
Women-owned firms generated
$1.7 trillion in 2017.
Women owned firms employ nearly 9 million people.
Women own more than 11.6 million firms in the U.S.
Female entrepreneurs earn 28% less than men in the U.S.
Across the globe, women are more likely to own sole proprietorships than men.
There are 231 million women around the world starting or running their own business.
27% of small business owners in the U.S. are women.
49% of women-owned businesses are less than 5 years old.
As of 2022, women are slightly more likely to own a 10+ year business (23.68%) than other entrepreneurs.
Women-owned businesses by founder’s age are as follows: Gen X (68.93%), Baby boomers (19.42%), Millennials (10.68%).
Women start their own businesses due to readiness for independence (57.89%), dissatisfaction with corporate America (37.72%), and passion pursuit (29.82%).
73.68% of women entrepreneurs report feeling somewhat or very happy.
38% of female business owners used cash to start their business.
Retail is the most popular industry for women-led small businesses.
Capital or cash flow issues are cited as a challenge by 29% of startups.
No market for product or service is sited as a challenge by 42% of startups.
It takes six months on average to hire someone for a startup.
28% of aspiring entrepreneurs don’t have cash to invest, or need to pay down debt before they take the plunge into self-employment.
22% of startups see recruiting and retaining employees as their biggest challenge.
1 out of 5 people haven’t taken the plunge to entrepreneurship because they are loyal to their current company.
14% of startups face lack of capital and cash flow as a significant challenge.
15% of businesses reported loss of revenue due to inflation.