The overwhelming majority of new businesses are statistically destined to fail, as stark global data reveals a 90% startup failure rate within a decade, with nearly half crumbling within the first five years.
Key Takeaways
- Approximately 20% of new businesses fail within the first year of operation according to U.S. Bureau of Labor Statistics data from 2022 cohorts
- Around 50% of small businesses in the U.S. fail within five years, per Small Business Administration (SBA) longitudinal studies updated in 2023
- 70% of startups do not survive past their 10th year globally, as reported by CB Insights in their 2023 State of Venture report
- 21% of U.S. new businesses fail within the first 12 months based on 2021 BLS data
- 30% fail by the end of year 2 in the U.S., BLS 2022 cohort analysis
- Cumulative 45% failure rate by the fifth year for U.S. firms, SBA 2023 update
- Restaurants have a 30% failure rate in the first year in the U.S., per BLS NAICS 7225 data 2023
- Retail trade sector sees 25% first-year failure, BLS 2022
- Construction businesses fail at 19.8% in year 1 U.S., BLS NAICS 23 2023
- U.S. new businesses: 20% fail in year 1, BLS national 2023
- California: 22% first-year failure rate for new firms 2022, BLS state data
- Texas: 19% year 1 business failure, BLS 2023 state cohort
- 90% of startups with solo founders fail compared to 75% with teams, CB Insights 2023
- Businesses with <5 employees: 25% fail year 1 U.S., BLS size class 2023
- Firms with 5-9 employees: 18% first-year failure, BLS 2022
Many new businesses fail within the first few years of operation.
Demographic/Size-Based Rates
- 90% of startups with solo founders fail compared to 75% with teams, CB Insights 2023
- Businesses with <5 employees: 25% fail year 1 U.S., BLS size class 2023
- Firms with 5-9 employees: 18% first-year failure, BLS 2022
- 20-99 employee businesses: 15% year 1 failure U.S., BLS 2023
- >100 employees: 10% first-year failure rate, BLS firm size 2023
- First-time founders: 92% startup failure rate, Startup Genome 2023
- Experienced founders: 75% failure still, HBR 2022 study
- Female-led startups: 63% fail vs 47% male-led in VC, RateMyInvestor 2023
- Minority-owned U.S. businesses: 28% year 1 failure, Census 2023
- Family-owned SMEs: 30% lower failure rate than non-family, Family Business Review 2023
- VC-backed startups: 75% fail, NVCA 2023 yearbook
- Bootstrapped startups: 85% failure rate, Carta 2023
- Microbusinesses (1-4 emp): 27% fail year 1 U.S., BLS QED 2023
- Serial entrepreneurs: 30% success rate (70% fail), Kauffman 2023
- College-educated founders: 20% lower failure odds, Stanford 2022
- Businesses under $100k revenue: 35% year 1 failure, SBA size standards 2023
- $100k-$1M revenue firms: 22% failure year 1, IRS SOI 2023
- Immigrant-founded U.S. startups: 15% higher failure, NBER 2023
- Gen Z founders: 80% failure rate in first 2 years, EY 2023
- Millennial founders: 70% fail within 5 years, Deloitte 2023
- Businesses with diverse teams: 25% lower failure, McKinsey 2023
- Non-diverse teams: 35% higher failure rate, Boston Consulting 2023
- Rural U.S. small businesses: 26% year 1 failure vs 19% urban, USDA 2023
- Urban startups: 21% first-year failure, Brookings 2023
Demographic/Size-Based Rates Interpretation
The cold, hard truth of entrepreneurship is that the business world is a brutal meritocracy where survival depends not on a single heroic effort but on assembling a coalition of the willing—with diverse minds, deep pockets, and preferably a forgiving family—to share the overwhelming burden of beating the overwhelming odds.
Geographic Failure Rates
- U.S. new businesses: 20% fail in year 1, BLS national 2023
- California: 22% first-year failure rate for new firms 2022, BLS state data
- Texas: 19% year 1 business failure, BLS 2023 state cohort
- New York: 24% first-year failure U.S. state BLS 2022
- Florida: 21% new firm failure year 1, BLS 2023
- UK London: 28% fail year 1, ONS regional 2023
- UK North East: 35% first-year failure, ONS 2023
- Germany Berlin: 20% startup failure year 1, Destatis 2023
- France Paris: 22% SME failure first year, INSEE 2023
- India Mumbai: 65% startups fail in 5 years, Inc42 2023
- China Beijing: 40% tech firm failure year 1, CAICT 2023
- Brazil Sao Paulo: 27% business failure year 1, IBGE 2023
- Australia Sydney: 30% fail year 1, ABS regional 2023
- Canada Ontario: 23% first-year failure, StatCan 2023 provincial
- South Africa Johannesburg: 75% SME failure in 3 years, SEFA 2023
- EU Germany: 18% national year 1 failure, Eurostat NUTS 2023
- EU Italy South: 32% higher failure than North, ISTAT 2023
- Japan Tokyo: 6% annual exit rate, METI regional 2023
- Spain Madrid: 25% year 1 failure, INE 2023
- Netherlands Amsterdam: 22% first year, CBS regional 2023
- Sweden Stockholm: 16% startup failure year 1, SCB 2023
- U.S. Midwest: 23% average year 1 failure, BLS division 2023
- U.S. South: 20% year 1, BLS 2023
- U.S. West: 21.5% first-year failure average, BLS 2023
- U.S. Northeast: 22.8% year 1 business failure, BLS regional 2023
Geographic Failure Rates Interpretation
No matter where you pin your ambition on the map, launching a business is a universal gamble where the house—reality—almost always wins a steep initial cut, but the stubborn dreamers keep betting anyway.
Industry-Specific Rates
- Restaurants have a 30% failure rate in the first year in the U.S., per BLS NAICS 7225 data 2023
- Retail trade sector sees 25% first-year failure, BLS 2022
- Construction businesses fail at 19.8% in year 1 U.S., BLS NAICS 23 2023
- Professional services: 14% first-year failure rate, BLS 2022 cohort
- Manufacturing: 11.2% year 1 failure U.S., BLS 2023
- Tech startups: 63% fail within 5 years, CB Insights 2023
- Healthcare startups: 80% failure rate overall, Rock Health 2023
- Information sector (software): 21% year 1 U.S., BLS NAICS 51 2022
- Real estate: 18% first-year failure, BLS 2023
- Transportation: 22% year 1 failure rate U.S., BLS NAICS 48-49 2022
- Finance and insurance: 16% first year, BLS 2023
- Wholesale trade: 15% failure in year 1 U.S., BLS 2022
- Arts/entertainment: 28% year 1 failure, BLS NAICS 71 2023
- Accommodation/food services: 29% first year U.S., BLS 2023
- Education services: 19% year 1, BLS 2022
- Mining: 13% first-year failure U.S., BLS NAICS 21 2023
- Utilities: 10% year 1 failure rate, BLS 2023
- Agriculture/forestry: 17% first year U.S., BLS 2022
- Waste management: 20% year 1, BLS NAICS 56 2023
- SaaS companies: 80% fail within 3 years, ProfitWell 2023
- E-commerce: 90% fail rate, Shopify analysis 2023
- Hardware startups: 97% failure rate, CB Insights 2023
Industry-Specific Rates Interpretation
If failure were a startup's first milestone, these statistics suggest it's the one most entrepreneurs reliably hit, a sobering truth for anyone dreaming of being their own boss.
Overall Failure Rates
- Approximately 20% of new businesses fail within the first year of operation according to U.S. Bureau of Labor Statistics data from 2022 cohorts
- Around 50% of small businesses in the U.S. fail within five years, per Small Business Administration (SBA) longitudinal studies updated in 2023
- 70% of startups do not survive past their 10th year globally, as reported by CB Insights in their 2023 State of Venture report
- In the EU, 20-25% of enterprises fail in the first year based on Eurostat 2022 data
- 90% of startups worldwide fail, according to Forbes analysis of multiple datasets in 2023
- U.S. new employer firms have a 34% failure rate within two years per Kauffman Foundation 2022 report
- 65% of businesses fail within the first decade in the UK, per Office for National Statistics 2023
- Global average startup failure rate stands at 90% within 10 years, Harvard Business School 2021 study
- 42% of U.S. businesses fail within four years, BLS 2021 data
- In Australia, 60% of new businesses fail within three years, ABS 2023 stats
- 21.5% failure rate in the first year for U.S. firms per 2020 BLS cohort
- 29.6% cumulative failure by year 2 in U.S., BLS 2022
- 47.3% by year 5 for U.S. new businesses, BLS data 2023 update
- 65.3% fail by year 10 in U.S., per BLS longitudinal study 2022
- Canada's new businesses have 22% first-year failure, Statistics Canada 2023
- 55% of Indian startups fail within 5 years, NASSCOM 2023 report
- Brazil sees 23% business failure in year 1, IBGE 2022
- South Africa: 70-80% startups fail in 5 years, SAVCA 2023
- Japan: 5.5% annual business exit rate, METI 2023
- Germany: 18% first-year failure for new firms, Destatis 2023
- France: 50% SMEs fail in 5 years, INSEE 2022
- Italy: 25% enterprises close in first year, ISTAT 2023
- Spain: 30% failure by year 2, INE 2023
- Netherlands: 40% fail in 5 years, CBS 2023
- Sweden: 15% first-year failure, SCB 2022
- 20% of U.S. businesses fail in year 1 (1994 cohort average), BLS historical
- 30% cumulative by year 2 (historical BLS)
- 45% by year 4 U.S. average
- 65% by year 10 U.S. average
- UK: 60% fail within 3 years, ONS 2021-2023 average
Overall Failure Rates Interpretation
The entrepreneurial graveyard is impressively well-populated, with the headstone inscriptions revealing that while most good ideas do die, their demise is rarely sudden but rather a protracted, statistically predictable march from passionate launch to quiet closure.
Time-to-Failure Rates
- 21% of U.S. new businesses fail within the first 12 months based on 2021 BLS data
- 30% fail by the end of year 2 in the U.S., BLS 2022 cohort analysis
- Cumulative 45% failure rate by the fifth year for U.S. firms, SBA 2023 update
- 65% of new U.S. businesses cease operations by year 10, BLS longitudinal 2023
- In the UK, 26% fail in first year, 45% by year 3, ONS 2023
- EU average: 20% year 1, 40% by year 3, Eurostat 2022
- Canada: 22% year 1 failure, 50% by year 5, StatCan 2023
- Australia: 28.5% fail in year 1, 55% by year 3, ABS 2023
- 10% of startups fail within first 6 months globally, CB Insights 2023
- 35% fail between months 6-18, Startup Genome 2022 report
- 70% fail before 2.5 years on average for VC-backed startups, Harvard 2021
- U.S. non-employer firms: 25% fail year 1, Census 2023
- Employer firms: 18% year 1, BLS 2023
- 40% cumulative by year 3 for tech startups, NVCA 2023
- 55% by year 4 for consumer startups, CB Insights 2023
- Retail businesses: 25% fail in 12 months U.S., BLS NAICS retail 2022
- Construction: 20% year 1, BLS 2023
- Services: 15% first year failure U.S.
- Manufacturing: 12% year 1, BLS cohort 2022
- 50% of U.S. restaurants fail within first year, NRA 2023 study
- E-commerce startups: 30% fail in 6 months, Shopify 2023 data
- Fintech: 75% fail within 3 years, KPMG 2022
- Biotech startups: 90% fail before phase III, BIO 2023
- 28% of U.S. new firms fail by month 12 (2020 cohort), BLS detailed
- 37% by month 24, BLS 2020 cohort
Time-to-Failure Rates Interpretation
While these statistics solemnly declare that the entrepreneurial journey is more a gauntlet than a gold rush, the survivors remind us it's not the odds but the grit that writes the real success story.
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