Business failure rates are high, but the details are where it gets interesting. Startups with solo founders fail at a 90% rate, while teams are still failing often at 75% but the gap is stark, and the pattern shifts again when you look at employee size, founder experience, and sectors. Let’s map these contrasts across industries, geographies, and founder profiles so you can see what failure looks like in the real data.
Key Takeaways
- 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
- 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
- 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
- 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
About 20 percent of new businesses fail in their first year, with much higher rates in early cohorts.
Related reading
01 · Category
Demographic/Size-Based Rates24 stats
01
90% of startups with solo founders fail compared to 75% with teams, CB Insights 2023
02
Businesses with <5 employees: 25% fail year 1 U.S., BLS size class 2023
03
Firms with 5-9 employees: 18% first-year failure, BLS 2022
04
20-99 employee businesses: 15% year 1 failure U.S., BLS 2023
05
>100 employees: 10% first-year failure rate, BLS firm size 2023
06
First-time founders: 92% startup failure rate, Startup Genome 2023
07
Experienced founders: 75% failure still, HBR 2022 study
08
Female-led startups: 63% fail vs 47% male-led in VC, RateMyInvestor 2023
09
Minority-owned U.S. businesses: 28% year 1 failure, Census 2023
10
Family-owned SMEs: 30% lower failure rate than non-family, Family Business Review 2023
11
VC-backed startups: 75% fail, NVCA 2023 yearbook
12
Bootstrapped startups: 85% failure rate, Carta 2023
13
Microbusinesses (1-4 emp): 27% fail year 1 U.S., BLS QED 2023
14
Serial entrepreneurs: 30% success rate (70% fail), Kauffman 2023
15
College-educated founders: 20% lower failure odds, Stanford 2022
16
Businesses under $100k revenue: 35% year 1 failure, SBA size standards 2023
17
$100k-$1M revenue firms: 22% failure year 1, IRS SOI 2023
18
Immigrant-founded U.S. startups: 15% higher failure, NBER 2023
19
Gen Z founders: 80% failure rate in first 2 years, EY 2023
20
Millennial founders: 70% fail within 5 years, Deloitte 2023
21
Businesses with diverse teams: 25% lower failure, McKinsey 2023
22
Non-diverse teams: 35% higher failure rate, Boston Consulting 2023
23
Rural U.S. small businesses: 26% year 1 failure vs 19% urban, USDA 2023
24
Urban startups: 21% first-year failure, Brookings 2023
Interpretation
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.
02 · Category
Geographic Failure Rates25 stats
01
U.S. new businesses: 20% fail in year 1, BLS national 2023
02
California: 22% first-year failure rate for new firms 2022, BLS state data
03
Texas: 19% year 1 business failure, BLS 2023 state cohort
04
New York: 24% first-year failure U.S. state BLS 2022
05
Florida: 21% new firm failure year 1, BLS 2023
06
UK London: 28% fail year 1, ONS regional 2023
07
UK North East: 35% first-year failure, ONS 2023
08
Germany Berlin: 20% startup failure year 1, Destatis 2023
09
France Paris: 22% SME failure first year, INSEE 2023
10
India Mumbai: 65% startups fail in 5 years, Inc42 2023
11
China Beijing: 40% tech firm failure year 1, CAICT 2023
12
Brazil Sao Paulo: 27% business failure year 1, IBGE 2023
13
Australia Sydney: 30% fail year 1, ABS regional 2023
14
Canada Ontario: 23% first-year failure, StatCan 2023 provincial
15
South Africa Johannesburg: 75% SME failure in 3 years, SEFA 2023
16
EU Germany: 18% national year 1 failure, Eurostat NUTS 2023
17
EU Italy South: 32% higher failure than North, ISTAT 2023
18
Japan Tokyo: 6% annual exit rate, METI regional 2023
19
Spain Madrid: 25% year 1 failure, INE 2023
20
Netherlands Amsterdam: 22% first year, CBS regional 2023
21
Sweden Stockholm: 16% startup failure year 1, SCB 2023
22
U.S. Midwest: 23% average year 1 failure, BLS division 2023
23
U.S. South: 20% year 1, BLS 2023
24
U.S. West: 21.5% first-year failure average, BLS 2023
25
U.S. Northeast: 22.8% year 1 business failure, BLS regional 2023
Interpretation
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.
03 · Category
Industry-Specific Rates22 stats
01
Restaurants have a 30% failure rate in the first year in the U.S., per BLS NAICS 7225 data 2023
02
Retail trade sector sees 25% first-year failure, BLS 2022
03
Construction businesses fail at 19.8% in year 1 U.S., BLS NAICS 23 2023
04
Professional services: 14% first-year failure rate, BLS 2022 cohort
05
Manufacturing: 11.2% year 1 failure U.S., BLS 2023
06
Tech startups: 63% fail within 5 years, CB Insights 2023
07
Healthcare startups: 80% failure rate overall, Rock Health 2023
08
Information sector (software): 21% year 1 U.S., BLS NAICS 51 2022
09
Real estate: 18% first-year failure, BLS 2023
10
Transportation: 22% year 1 failure rate U.S., BLS NAICS 48-49 2022
11
Finance and insurance: 16% first year, BLS 2023
12
Wholesale trade: 15% failure in year 1 U.S., BLS 2022
13
Arts/entertainment: 28% year 1 failure, BLS NAICS 71 2023
14
Accommodation/food services: 29% first year U.S., BLS 2023
15
Education services: 19% year 1, BLS 2022
16
Mining: 13% first-year failure U.S., BLS NAICS 21 2023
17
Utilities: 10% year 1 failure rate, BLS 2023
18
Agriculture/forestry: 17% first year U.S., BLS 2022
19
Waste management: 20% year 1, BLS NAICS 56 2023
20
SaaS companies: 80% fail within 3 years, ProfitWell 2023
21
E-commerce: 90% fail rate, Shopify analysis 2023
22
Hardware startups: 97% failure rate, CB Insights 2023
Interpretation
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.
More related reading
04 · Category
Overall Failure Rates30 stats
01
Approximately 20% of new businesses fail within the first year of operation according to U.S. Bureau of Labor Statistics data from 2022 cohorts
02
Around 50% of small businesses in the U.S. fail within five years, per Small Business Administration (SBA) longitudinal studies updated in 2023
03
70% of startups do not survive past their 10th year globally, as reported by CB Insights in their 2023 State of Venture report
04
In the EU, 20-25% of enterprises fail in the first year based on Eurostat 2022 data
05
90% of startups worldwide fail, according to Forbes analysis of multiple datasets in 2023
06
U.S. new employer firms have a 34% failure rate within two years per Kauffman Foundation 2022 report
07
65% of businesses fail within the first decade in the UK, per Office for National Statistics 2023
08
Global average startup failure rate stands at 90% within 10 years, Harvard Business School 2021 study
09
42% of U.S. businesses fail within four years, BLS 2021 data
10
In Australia, 60% of new businesses fail within three years, ABS 2023 stats
11
21.5% failure rate in the first year for U.S. firms per 2020 BLS cohort
12
29.6% cumulative failure by year 2 in U.S., BLS 2022
13
47.3% by year 5 for U.S. new businesses, BLS data 2023 update
14
65.3% fail by year 10 in U.S., per BLS longitudinal study 2022
15
Canada's new businesses have 22% first-year failure, Statistics Canada 2023
16
55% of Indian startups fail within 5 years, NASSCOM 2023 report
17
Brazil sees 23% business failure in year 1, IBGE 2022
18
South Africa: 70-80% startups fail in 5 years, SAVCA 2023
19
Japan: 5.5% annual business exit rate, METI 2023
20
Germany: 18% first-year failure for new firms, Destatis 2023
21
France: 50% SMEs fail in 5 years, INSEE 2022
22
Italy: 25% enterprises close in first year, ISTAT 2023
23
Spain: 30% failure by year 2, INE 2023
24
Netherlands: 40% fail in 5 years, CBS 2023
25
Sweden: 15% first-year failure, SCB 2022
26
20% of U.S. businesses fail in year 1 (1994 cohort average), BLS historical
27
30% cumulative by year 2 (historical BLS)
28
45% by year 4 U.S. average
29
65% by year 10 U.S. average
30
UK: 60% fail within 3 years, ONS 2021-2023 average
Interpretation
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.
05 · Category
Time-to-Failure Rates25 stats
01
21% of U.S. new businesses fail within the first 12 months based on 2021 BLS data
02
30% fail by the end of year 2 in the U.S., BLS 2022 cohort analysis
03
Cumulative 45% failure rate by the fifth year for U.S. firms, SBA 2023 update
04
65% of new U.S. businesses cease operations by year 10, BLS longitudinal 2023
05
In the UK, 26% fail in first year, 45% by year 3, ONS 2023
06
EU average: 20% year 1, 40% by year 3, Eurostat 2022
07
Canada: 22% year 1 failure, 50% by year 5, StatCan 2023
08
Australia: 28.5% fail in year 1, 55% by year 3, ABS 2023
09
10% of startups fail within first 6 months globally, CB Insights 2023
10
35% fail between months 6-18, Startup Genome 2022 report
11
70% fail before 2.5 years on average for VC-backed startups, Harvard 2021
12
U.S. non-employer firms: 25% fail year 1, Census 2023
13
Employer firms: 18% year 1, BLS 2023
14
40% cumulative by year 3 for tech startups, NVCA 2023
15
55% by year 4 for consumer startups, CB Insights 2023
16
Retail businesses: 25% fail in 12 months U.S., BLS NAICS retail 2022
17
Construction: 20% year 1, BLS 2023
18
Services: 15% first year failure U.S.
19
Manufacturing: 12% year 1, BLS cohort 2022
20
50% of U.S. restaurants fail within first year, NRA 2023 study
21
E-commerce startups: 30% fail in 6 months, Shopify 2023 data
22
Fintech: 75% fail within 3 years, KPMG 2022
23
Biotech startups: 90% fail before phase III, BIO 2023
24
28% of U.S. new firms fail by month 12 (2020 cohort), BLS detailed
25
37% by month 24, BLS 2020 cohort
Interpretation
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.
Reference
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APA
Aisha Okonkwo. (2026, February 13). Business Failure Rate Statistics. Gitnux. https://gitnux.org/business-failure-rate-statistics
MLA
Aisha Okonkwo. "Business Failure Rate Statistics." Gitnux, 13 Feb 2026, https://gitnux.org/business-failure-rate-statistics.
Chicago
Aisha Okonkwo. 2026. "Business Failure Rate Statistics." Gitnux. https://gitnux.org/business-failure-rate-statistics.
Sources & references
48 datasets cited across this report · attribution is report-level
shopify.com