{"id":15304,"date":"2024-04-08T08:36:03","date_gmt":"2024-04-08T08:36:03","guid":{"rendered":"https:\/\/jobera.com\/?p=15304"},"modified":"2024-04-08T08:36:03","modified_gmt":"2024-04-08T08:36:03","slug":"small-business-failure-statistics","status":"publish","type":"post","link":"https:\/\/jobera.com\/resources\/small-business-failure-statistics\/","title":{"rendered":"30+ Small Business Failure Statistics: Navigate Setbacks of Entrepreneurship [2026]"},"content":{"rendered":"\n<p>There are <strong>33.2 million small businesses<\/strong> across the US, and <strong>1 in every 5 <\/strong>fails within the first year i.e,<\/p>\n\n\n\n<p><strong>20% <\/strong>of small businesses fail within the<strong> first year<\/strong>.<\/p>\n\n\n\n<p><strong>23%<\/strong> of businesses failed because they didn\u2019t have the<strong> right people<\/strong> in the <strong>team<\/strong>.<\/p>\n\n\n\n<p><strong>Accommodation and food services<\/strong> businesses have the <strong>lowest <\/strong>failure rates within the first year.<\/p>\n\n\n\n<p>The number of minority-owned firms in the US increased by<strong> 38% between 2007 and 2016<\/strong>.<\/p>\n\n\n\n<p><em>Ready to dive deeper?<\/em> Unveil the factors driving small business setbacks with essential failure statistics.<\/p>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><nav><ul><li class=\"\"><a href=\"#top-small-business-failure-statistics-editors-pick\">Top Small Business Failure Statistics: Editor\u2019s Pick<\/a><\/li><li class=\"\"><a href=\"#20-of-small-businesses-dont-survive-first-year\">20% of Small Businesses Don\u2019t Survive First Year<\/a><\/li><li class=\"\"><a href=\"#why-do-small-businesses-fail\">Why do Small Businesses Fail?<\/a><\/li><li class=\"\"><a href=\"#small-business-survival-rates-by-industry\">Small Business Survival Rates By Industry<\/a><\/li><li class=\"\"><a href=\"#small-business-facts-trends\">Small Business Facts &amp; Trends<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"top-small-business-failure-statistics-editors-pick\">Top Small Business Failure Statistics: Editor\u2019s Pick<\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"427\" src=\"https:\/\/dev.jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-reason-1024x427.jpg\" alt=\"No market need for the product\/service is the top reason for small business failure\" class=\"wp-image-15308\" srcset=\"https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-reason-1024x427.jpg 1024w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-reason-300x125.jpg 300w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-reason-768x320.jpg 768w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-reason.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>80%<\/strong> of small businesses survive the<strong> first year<\/strong>. <strong>20%<\/strong> fail within the first year. <sup>[1]<\/sup><\/li>\n\n\n\n<li><strong>30%<\/strong> of small businesses fail by the end of the <strong>second year<\/strong>. <sup>[1]<\/sup><\/li>\n\n\n\n<li>Most of these failed businesses are from <strong>Columbia <\/strong>(<strong>28%<\/strong>), ranking highest in failure rate within the<strong> first year.<\/strong> <sup>[1]<\/sup><\/li>\n\n\n\n<li><strong>29%<\/strong> of businesses failed because they had<strong> no cash left<\/strong>. <sup>[7]<\/sup><\/li>\n\n\n\n<li><strong>14%<\/strong> of businesses failed because they <strong>ignored <\/strong>their <strong>customer needs<\/strong>. <sup>[7]<\/sup><\/li>\n\n\n\n<li><strong>77%<\/strong> of small business owners who apply for a <strong>bank loan<\/strong> from a big bank get rejected. <sup>[2]<\/sup><\/li>\n\n\n\n<li>The<strong> IT industry<\/strong> has the <strong>highest <\/strong>business failure rates within the <strong>first year. <\/strong><strong><sup>[5]<\/sup><\/strong><\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"20-of-small-businesses-dont-survive-first-year\">20% of Small Businesses Don\u2019t Survive First Year<\/h2>\n\n\n\n<p><em>What percentage of small businesses fail?<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>80%<\/strong> of small businesses survive the<strong> first year<\/strong>. <strong>20%<\/strong> fail within the first year. <sup>[1]<\/sup><\/li>\n\n\n\n<li><strong>30%<\/strong> of small businesses fail by the end of the <strong>second year<\/strong>.&nbsp;<\/li>\n\n\n\n<li><strong>50%<\/strong> of small businesses fail by the end of their <strong>fifth year<\/strong>.&nbsp;<\/li>\n\n\n\n<li><strong>70%<\/strong> of small businesses fail by their <strong>tenth year.<\/strong>&nbsp;<\/li>\n\n\n\n<li><strong>75%<\/strong> of small businesses fail by the end of <strong>fifteen years<\/strong>.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/dev.jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-rates-1024x683.jpg\" alt=\"Small business failure rates each year\" class=\"wp-image-15310\" srcset=\"https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-rates-1024x683.jpg 1024w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-rates-300x200.jpg 300w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-rates-768x512.jpg 768w, https:\/\/jobera.com\/resources\/wp-content\/uploads\/2024\/04\/small-business-failure-rates.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><em>Source: <a href=\"https:\/\/www.bls.gov\/bdm\/us_age_naics_00_table7.txt%5C\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BLS<\/a><\/em><\/p>\n\n\n\n<p>It is to be noted that there are <strong>33.2 million small businesses<\/strong> across the US, and <strong>1 in every 5 <\/strong>fails within the first year. <sup>[1]<\/sup><\/p>\n\n\n\n<p>Most of these failed businesses are from <strong>Columbia <\/strong>(<strong>28%<\/strong>), ranking highest in failure rate within the<strong> first year.<\/strong> <sup>[1]<\/sup><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"why-do-small-businesses-fail\">Why do Small Businesses Fail?<\/h2>\n\n\n\n<p>According to a poll conducted by CBInsights, founders specified the following reasons for their business failure.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>No market<\/strong> need for the product\/service- <strong>42%<\/strong>. <sup>[6]<\/sup><\/li>\n\n\n\n<li><strong>29%<\/strong> of businesses failed because they had<strong> no cash left<\/strong>.<\/li>\n\n\n\n<li><em>Do you have a strong team?<\/em> <strong>23%<\/strong> of businesses failed because they didn\u2019t have the<strong> right people<\/strong> in the <strong>team<\/strong>.<\/li>\n\n\n\n<li><strong>19%<\/strong> were <strong>outcompeted<\/strong>.<\/li>\n\n\n\n<li><strong>18% <\/strong>failed because of <strong>pricing and cost<\/strong> issues.<\/li>\n\n\n\n<li><strong>17%<\/strong> had offered a<strong> poor quality product<\/strong>.<\/li>\n\n\n\n<li><strong>17%<\/strong> didn\u2019t have a <strong>good business model<\/strong>.<\/li>\n\n\n\n<li><strong>14%<\/strong> of small businesses didn\u2019t have<strong> good marketing<\/strong> in place.<\/li>\n\n\n\n<li><em>Attention! Customer service may be your key to success.<\/em><strong> 14%<\/strong> failed because they <strong>ignored <\/strong>their <strong>customer needs<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"small-business-survival-rates-by-industry\">Small Business Survival Rates By Industry<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th><strong>Industry<\/strong><\/th><th><strong>Business failure rate within 1 year<\/strong><\/th><th><strong>Rank, 1-year failure rate<\/strong><\/th><th><strong>Business failure rate after 5 years<\/strong><\/th><th><strong>Rank, 5-year failure rate<\/strong><\/th><th><strong>Business failure rate after 10 years<\/strong><\/th><th><strong>Rank, 10-year failure rate<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Agriculture, forestry, fishing and hunting<\/td><td>13.8%<\/td><td>18<\/td><td>29.6%<\/td><td>19<\/td><td>50.0%<\/td><td>19<\/td><\/tr><tr><td>Mining, quarrying, and oil and gas extraction<\/td><td>21.9%<\/td><td>5<\/td><td>52.0%<\/td><td>2<\/td><td>74.4%<\/td><td>1<\/td><\/tr><tr><td>Utilities<\/td><td>21.2%<\/td><td>8<\/td><td>38.3%<\/td><td>15<\/td><td>57.4%<\/td><td>17<\/td><\/tr><tr><td>Construction<\/td><td>18.9%<\/td><td>10<\/td><td>40.1%<\/td><td>13<\/td><td>61.2%<\/td><td>14<\/td><\/tr><tr><td>Manufacturing<\/td><td>17.2%<\/td><td>12<\/td><td>38.2%<\/td><td>16<\/td><td>56.9%<\/td><td>18<\/td><\/tr><tr><td>Wholesale trade<\/td><td>18.8%<\/td><td>11<\/td><td>46.8%<\/td><td>5<\/td><td>69.8%<\/td><td>5<\/td><\/tr><tr><td>Retail trade<\/td><td>16.7%<\/td><td>14<\/td><td>69.6%<\/td><td>1<\/td><td>73.0%<\/td><td>2<\/td><\/tr><tr><td>Transportation and warehousing<\/td><td>19.8%<\/td><td>9<\/td><td>42.7%<\/td><td>9<\/td><td>67.2%<\/td><td>6<\/td><\/tr><tr><td>Information<\/td><td>26.4%<\/td><td>1<\/td><td>51.8%<\/td><td>3<\/td><td>72.1%<\/td><td>3<\/td><\/tr><tr><td>Finance and insurance<\/td><td>22.0%<\/td><td>4<\/td><td>44.5%<\/td><td>8<\/td><td>62.9%<\/td><td>11<\/td><\/tr><tr><td>Real estate and rental and leasing<\/td><td>16.3%<\/td><td>16<\/td><td>34.8%<\/td><td>18<\/td><td>59.1%<\/td><td>16<\/td><\/tr><tr><td>Professional, scientific and technical services<\/td><td>23.4%<\/td><td>2<\/td><td>47.2%<\/td><td>4<\/td><td>70.2%<\/td><td>4<\/td><\/tr><tr><td>Management of companies and enterprises<\/td><td>21.7%<\/td><td>6<\/td><td>46.1%<\/td><td>7<\/td><td>64.7%<\/td><td>9<\/td><\/tr><tr><td>Administrative and waste services<\/td><td>23.1%<\/td><td>3<\/td><td>46.7%<\/td><td>6<\/td><td>66.2%<\/td><td>7<\/td><\/tr><tr><td>Educational services<\/td><td>21.5%<\/td><td>7<\/td><td>40.4%<\/td><td>11<\/td><td>62.6%<\/td><td>12<\/td><\/tr><tr><td>Health care and social assistance<\/td><td>14.4%<\/td><td>17<\/td><td>41.2%<\/td><td>10<\/td><td>63.3%<\/td><td>10<\/td><\/tr><tr><td>Arts, entertainment and recreation<\/td><td>16.7%<\/td><td>14<\/td><td>40.3%<\/td><td>12<\/td><td>65.2%<\/td><td>8<\/td><\/tr><tr><td>Accommodation and food services<\/td><td>13.6%<\/td><td>19<\/td><td>39.6%<\/td><td>14<\/td><td>62.0%<\/td><td>13<\/td><\/tr><tr><td>Other services (except public administration)<\/td><td>17.1%<\/td><td>13<\/td><td>37.8%<\/td><td>17<\/td><td>60.7%<\/td><td>15<\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><em>Source: <a href=\"https:\/\/www.lendingtree.com\/business\/small\/failure-rate\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">LendingTree<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p>Alt: [Business failure rate across industries]<\/p>\n\n\n\n<p>The<strong> IT industry<\/strong> has the <strong>highest <\/strong>business failure rates within the <strong>first year.<\/strong> <sup>[5]<\/sup><\/p>\n\n\n\n<p><strong>Accommodation and food services<\/strong> businesses have the <strong>lowest <\/strong>failure rates within the first year. <sup>[5]<\/sup><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"small-business-facts-trends\">Small Business Facts &amp; Trends<\/h2>\n\n\n\n<p><strong>77%<\/strong> of small business owners who apply for a <strong>bank loan<\/strong> from a big bank get rejected. <sup>[2]<\/sup><\/p>\n\n\n\n<p><em>That\u2019s not all.<\/em>&nbsp;<\/p>\n\n\n\n<p><strong>About 52%<\/strong> of small business owners who apply for a bank loan from a <strong>small bank get rejected. <\/strong><sup>[2]<\/sup><\/p>\n\n\n\n<p>Women entrepreneurship is growing. Women own <strong>more than 11.6 million firms<\/strong> in the US. <sup>[3]<\/sup><\/p>\n\n\n\n<p>Minority-owned small businesses are flourishing too, as the number of minority-owned firms in the US increased by<strong> 38% between 2007 and 2016<\/strong>. <sup>[4]<\/sup><\/p>\n\n\n\n<div class=\"wp-block-columns has-background is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\" style=\"background-color:#fff9ed\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p><strong>If you found this article interesting, you might enjoy these too:<\/strong><\/p>\n\n\n<p>[related_posts_by_tax taxonomies=&#8221;category,post_tag&#8221; posts_per_page=&#8221;5&#8243; orderby=&#8221;post_modified&#8221; title=&#8221;&#8221;]<\/p>\n<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"fa-qs\">FAQs&nbsp;<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-percentage-of-small-businesses-fail-within-the-first-year\">What percentage of small businesses fail within the first year?<\/h3>\n\n\n\n<p>Approximately 20% of small businesses fail within the first year of operation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-are-the-main-reasons-for-small-business-failure\">What are the main reasons for small business failure?<\/h3>\n\n\n\n<p>The main reasons for small business failure include no market need for the product or service, financial constraints leading to cash depletion, inadequate team composition, intense competition, pricing, and cost issues, poor product quality, and ineffective business models.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-are-the-survival-rates-of-small-businesses-over-time\">What are the survival rates of small businesses over time?<\/h3>\n\n\n\n<p>Survival rates for small businesses decrease over time, with approximately 30% failing by the end of the second year, 50% failing by the end of the fifth year, and 70% failing by the tenth year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"what-challenges-do-small-business-owners-face-when-seeking-funding\">What challenges do small business owners face when seeking funding?<\/h3>\n\n\n\n<p>Small business owners often face challenges accessing funding, with a high percentage experiencing rejection when applying for bank loans, both from big banks and small banks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"conclusion\">Conclusion&nbsp;<\/h2>\n\n\n\n<p>Despite the significant number of small businesses in the United States, a notable portion faces failure within the first few years of operation. Factors contributing to business failure include market need, financial constraints, inadequate team composition, fierce competition, pricing issues, product quality, and ineffective business models.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sources\">Sources<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li>BLS.gov. <a href=\"https:\/\/www.bls.gov\/bdm\/us_age_naics_00_table7.txt\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Table 7. Survival of private sector establishments by opening year<\/a><\/li>\n\n\n\n<li>Biz2credit.com. <a href=\"https:\/\/www.biz2credit.com\/small-business-lending-index\/march-2016\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Biz2Credit Small Business Lending Index for March 2016<\/a><\/li>\n\n\n\n<li>NAWBO.org. <a href=\"https:\/\/www.nawbo.org\/resources\/women-business-owner-statistics\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Women Business Owner Statistics<\/a><\/li>\n\n\n\n<li>MBDA.gov. <a href=\"https:\/\/www.mbda.gov\/page\/us-business-fact-sheets\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">US Business Fact Sheets<\/a><\/li>\n\n\n\n<li>LendingTree. <a href=\"https:\/\/www.lendingtree.com\/business\/small\/failure-rate\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Business failure rate across industries<\/a><\/li>\n\n\n\n<li>CB insights. <a href=\"https:\/\/www.cbinsights.com\/research\/report\/startup-failure-reasons-top\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">The Top 12 Reasons Startups Fail<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>There are 33.2 million small businesses across the US, and 1 in every 5 fails within the first year i.e,\u2026<\/p>\n","protected":false},"author":6,"featured_media":15313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[184,78,114],"class_list":["post-15304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-statistics","tag-entrepreneurs","tag-failure","tag-small-business"],"_links":{"self":[{"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/posts\/15304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/comments?post=15304"}],"version-history":[{"count":0,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/posts\/15304\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/media\/15313"}],"wp:attachment":[{"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/media?parent=15304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/categories?post=15304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobera.com\/resources\/wp-json\/wp\/v2\/tags?post=15304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}