Thursday, November 11, 2010

Small Business Failure Rate – What you should know

“90% of all new small businesses fail within the first few years!” You may have heard that statistic before. Well, it seems that there isn’t much in available data to support it. Maybe it’s a scare tactic or maybe it’s just people exaggerating. Either way, just because a lot of businesses fail, it doesn’t mean that yours has to be one of them. 

But, since we’re on the topic, let’s examine the small business failure rate a little bit closer. According to data available on the US Small Business Administration’s website, about 34% of new employer firms are still in business 10 years after opening. That often won’t even include businesses that may change entity types or reincorporate. So, I think it’s safe to say that about 1/3 of new businesses survive their first 10 years. Now, if we were talking human survival rate, that’s pretty bad but for a small business survival rate that isn’t too bad.

Data from the SBA website states that 7/10 new firms survive at least 2 years, ½ at least 5 years, 1/3 at least 10 years, and ¼ at least 15 years or more. They also stated that small business failure rates were similar across states and major industries. 

So, after looking at that data on the US small business failure rate and going to see what other people out on the net thought of this rate, I found a post from 2008 on Small Business Trends that also shares more data. According to their figures, about 29% of the small businesses they were tracking were still in business 10 years later; a little lower that the SBA numbers. Also, their data showed that about 25% of the small business that fail, do so within the first year. So, if you are past your first year in business, your chances of survival just got a lot better!

I hope this small business resource was helpful to you. Please leave a comment and let me know your thoughts on the small business failure rate. Also, be sure to pass this article along to your friends using one of the social media or email links below!

(Image: Some rights reserved,  TheGiantVermin.)  


  1. It's a sad fact that there are small business that fail during the first year. I can tell you that the first time it happens, you're terrified, because everything you've done all the effort and dreams will probably be lost.

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  2. I like your post. There may be many reasons for small business failure.

    Brisbane accountant

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