About one in five new businesses in the United States fails within the first year, and half do not make it past five years. The cost is not just personal. Failed firms can destroy $30,000 to $100,000 in lost wages and productivity per case in the United States.
Key Takeaways
- US business failures cost $30,000-$100,000 per case in lost wages/productivity per BLS 2023
- US manufacturing firms have 10.1% annual failure rate per BLS 2023 Q4 data on business births/deaths
- The number one reason for business failure is lack of market need, cited in 42% of cases per CB Insights 2023 post-mortem analysis of 300+ startups
- Approximately 20% of new businesses in the United States fail within the first year of operation, based on data from 2013 to 2023 cohorts
- 50% of US businesses survive past 5 years, 33% past 10 years, 25% past 15 years per SBA 2024 data on 2018 cohort
Most small businesses fail within the first few years, so early planning and cash flow matter most.
Related reading
01 · Category
Economic and Financial Aspects24 stats
01
US business failures cost $30,000-$100,000 per case in lost wages/productivity per BLS 2023
02
Annual US small business failures lead to $1.8 trillion GDP loss equivalent per SBA 2023 advocacy
03
Failed startups destroy $1.2 million average VC investment per deal per Cambridge Associates 2023
04
SMB bankruptcies cost banks $50B in bad loans yearly Fed 2023
05
UK business insolvencies 25,000 in 2023 costing £10B economy-wide per Insolvency Service
06
Global startup failures waste $500B in equity annually per Dealroom 2023
07
US restaurant failures post-2020 cost 1M jobs, $100B revenue per NRA 2023
08
Failed firms leave $200B unpaid supplier debts yearly US per Dun & Bradstreet 2023
09
Bankruptcy filings up 20% in 2023 costing $15B legal fees per ABI
10
Retail failures 2023 led to 500K job losses US per NRF
11
VC dry powder $300B risks higher failures without exits per PitchBook Q4 2023
12
Failed tech layoffs 260K jobs 2023 costing $20B severance per Layoffs.fyi
13
SME failures reduce tax revenue $50B annually US IRS estimates 2023
14
Construction failures cost $40B in unfinished projects US AGC 2023
15
Global insolvencies up 10% 2023 costing $2T GDP per World Bank
16
Failed startups average $1.5M founder personal loss per Carta 2023 equity data
17
US Chapter 11 filings 20K in 2023 with $1T assets liquidated per Epiq
18
Pandemic failures cost EU €300B in output losses Eurostat 2023
19
Supplier ripple effects from failures cost 2x direct losses per McKinsey 2023
20
Fintech failures expose $10B fraud losses yearly per Chainalysis 2023
21
Average failed business loses $150K inventory value per BizMiner 2023
22
Job displacement from failures 2M US workers/year unemployment cost $100B, DOL 2023
23
Failed e-com sites abandon $5B carts annually indirectly per Baymard 2023
24
Corporate failures reduce consumer confidence index by 5 points avg Fed NY 2023
Interpretation
Economic and Financial Aspects Interpretation
The sheer financial carnage of business failures, from vaporized investments and mountains of debt to shattered livelihoods and wasted innovation, reveals an economic battleground where the collateral damage is measured in trillions and paid by everyone.
02 · Category
Industry-Specific Failure Data30 stats
01
US manufacturing firms have 10.1% annual failure rate per BLS 2023 Q4 data on business births/deaths
02
Restaurants see 30% failure in first year, 80% cumulative by year five per BLS 2022-2023 cohorts
03
Construction businesses fail at 25% annually due to economic cycles, per Census Bureau 2023
04
Retail trade failure rate 12.4% per year, BLS Business Employment Dynamics 2023
05
Tech sector (information) has 11.5% failure rate, highest in services, BLS 2023
06
Healthcare services fail at 8.2% annually, lower due to regulations, BLS 2023
07
Transportation/warehousing 14.3% failure rate, BLS 2023 Q4
08
Accommodation/food services 17.5% highest failure, BLS 2023
09
Arts/entertainment/recreation 13.8%, BLS 2023
10
Mining/quarrying/oil/gas 12.1%, volatile, BLS 2023
11
Wholesale trade 9.7% failure rate, BLS 2023
12
Real estate/rental/leasing 11.2%, BLS 2023
13
Professional/scientific/technical services 10.9%, BLS 2023
14
Administrative/support/waste 15.6%, high turnover, BLS 2023
15
Education services 9.4%, stable, BLS 2023
16
Finance/insurance 8.5%, lowest volatility, BLS 2023
17
Utilities 7.2%, most stable, BLS 2023
18
Agriculture/forestry/fishing/hunting 11.8%, BLS 2023
19
Management companies 12.5%, BLS 2023
20
Other services (repair) 13.2%, BLS 2023
21
Fintech startups fail at 75% within 3 years per KPMG 2023 report on 500 firms
22
Clean energy startups 65% failure rate, per Wood Mackenzie 2023 analysis
23
E-commerce fashion brands 90% fail within 2 years, per McKinsey fashion report 2023
24
Gaming startups 88% failure, per Newzoo 2023
25
Biotech 80% Phase II failure, per Nature Reviews 2023
26
Logistics tech 70% fail from scaling issues, per Flexport 2023 study
27
Edtech 60% post-pandemic failures, per HolonIQ 2023
28
Agritech 55% failure rate, per AgFunder 2023
29
Adtech 72% fail within 4 years, per IAB 2023
30
Proptech 68% failure, per CBRE 2023 report
Interpretation
Industry-Specific Failure Data Interpretation
America’s entrepreneurial spirit is essentially a nationwide experiment in throwing spaghetti at the wall, and according to the data, most of it is not sticking.
03 · Category
Reasons for Business Failure30 stats
01
The number one reason for business failure is lack of market need, cited in 42% of cases per CB Insights 2023 post-mortem analysis of 300+ startups
02
Running out of cash accounts for 29% of startup failures, according to Harvard Business School study on 2000+ ventures 2022
03
Not the right team causes 23% of failures, per Founder Institute global survey of 3000+ founders 2023
04
Get outcompeted by 19% of failures, CB Insights 2023
05
Poor product-market fit leads to 17% failures, per postmortem analysis by Failory 2023 of 100+ companies
06
Pricing/cost issues in 15% of cases, CB Insights 2023
07
Poor user experience causes 14% failures, per same CB Insights report
08
Lack of business model validity in 13%, CB Insights 2023
09
Bad marketing strategy accounts for 12% per Founder Institute 2023
10
Ignoring customers leads to 11% failures, Failory 2023
11
Product mistimed at 10%, CB Insights
12
Lose focus in 9% cases, per HBS study 2022
13
Disharmony among team/investors 8%, CB Insights 2023
14
Pivot gone bad 7%, same source
15
Lack of passion 6%, Founder Institute 2023
16
Failure to pivot 5%, Failory 2023
17
Poor sales process 4%, per Sales Benchmark Index 2022 analysis of 500 SMBs
18
Inadequate funding rounds cause 3% direct failures but amplify others, per PitchBook 2023
19
Legal/regulatory issues in 2%, CB Insights
20
Burnout among founders 2%, per First Round Review 2022 survey
21
Supply chain disruptions post-COVID caused 18% more failures in manufacturing, per McKinsey 2023
22
Cyber attacks lead to 5% of SMB closures annually, per Verizon DBIR 2023
23
Inflation erodes margins causing 22% failures in retail 2022-2023, per NRF report
24
Inadequate digital transformation fails 35% of traditional businesses, Gartner 2023
25
Leadership gaps cause 29% of failures per Blanchard study 2022 of 1000 firms
26
Overexpansion too soon 15%, per US Chamber of Commerce 2023 SMB report
27
Failure to innovate leads to 27% declines in tech sector, per Deloitte 2023
28
Restaurants fail 60% due to location/foot traffic issues, per NRA 2023
29
E-commerce businesses fail 80% from poor SEO/traffic, per Ahrefs 2023 study
30
Construction firms fail 25% from cash flow mismanagement, per CFMA 2022
Interpretation
Reasons for Business Failure Interpretation
It seems the primary art of business is not solving imaginary problems with perfect products, but rather the humble, ongoing chore of finding real people who actually want what you're selling before you run out of money and patience.
More related reading
04 · Category
Startup Failure Rates29 stats
01
Approximately 20% of new businesses in the United States fail within the first year of operation, based on data from 2013 to 2023 cohorts
02
In the UK, 60% of businesses started in 2017 failed by their fifth anniversary in 2022, according to ONS data
03
Globally, 90% of startups fail within the first 10 years, with fintech seeing 75% failure rate per CB Insights analysis
04
In Canada, 22% of small businesses fail in year one and 51% by year five, per Statistics Canada 2021 report
05
Australian startups have a 25.7% failure rate in the first year, rising to 63.1% by year three, from ABS data 2020-2023
06
In India, 80-90% of startups fail within five years due to market fit issues, per Inc42 report 2023
07
US restaurant startups fail at 30% in year one, per BLS establishment data 2022
08
European VC-backed startups have 70% failure rate within 10 years, per Dealroom 2023 analysis
09
In Brazil, 23.7% of formal businesses fail in first year, per SEBRAE 2022 study
10
South African SMEs have 70-80% failure rate within first five years, per Stats SA 2021
11
Japanese startups fail at 10% in year one but 50% by year five, per METI 2023 report
12
In Germany, 33% of startups fail within three years, per Destatis 2022
13
Singapore startups have 20% first-year failure, 55% by year five, per Enterprise Singapore 2023
14
Mexican businesses fail at 65% within five years, per INEGI 2022
15
In France, 50% of new firms fail by year five, per INSEE 2023 data
16
Nigerian startups have 85% failure rate in first three years, per SMEDAN 2022
17
Swedish startups fail at 25% in year one, per SCB 2023
18
In the Netherlands, 40% of startups fail within four years, per CBS 2022
19
Turkish SMEs have 60% failure by year five, per TÜİK 2023
20
UAE startups fail at 15% in year one but 70% by decade, per Dubai SME 2022
21
In the US, Black-owned businesses fail at 40% higher rate than white-owned in first year, per Fed 2023
22
Women-led startups in US fail 2x faster than male-led, per Kauffman 2022
23
Tech startups in Silicon Valley have 63% failure rate within five years, per NVCA 2023
24
Retail startups fail at 28% in year one globally, per Shopify 2023 analysis
25
In China, 80% of internet startups fail within three years, per iResearch 2022
26
Israeli startups have lower 20% five-year failure vs global 50%, per Startup Nation Central 2023
27
In Spain, 30% of new businesses fail in first two years, per INE 2023
28
Argentine startups fail at 70% within four years, per IADE 2022
29
In Italy, 45% of startups cease by year three, per ISTAT 2023
Interpretation
Startup Failure Rates Interpretation
The grimly consistent global march of startup mortality reveals that while the entrepreneurial spirit is universal, so too is the sobering truth that most ventures are a high-stakes race against time, capital, and market reality.
05 · Category
Survival and Longevity25 stats
01
50% of US businesses survive past 5 years, 33% past 10 years, 25% past 15 years per SBA 2024 data on 2018 cohort
02
Only 10% of startups last 10+ years globally per Crunchbase 2023 longitudinal study
03
UK businesses: 45% survive 5 years, 33% 10 years per ONS 2023 on 2013 starters
04
30% of new US firms survive 10 years, BLS 2023 on 2013 cohort
05
VC-backed startups: 25% survive 10 years vs 10% bootstrapped, per NVCA 2023
06
Family businesses 30% survive to second gen, 12% third, 3% fourth per Family Business Review 2023
07
65% of US restaurants close within year one, 80% by year five per BLS 2023
08
Canadian SMEs: 50% survive 5 years, per StatCan 2023 on 2018 cohort
09
Australian firms: 60% survive 3 years, 40% 5 years ABS 2023
10
70% of Indian startups fail before 5 years, 20% survive per NASSCOM 2023
11
German startups 50% survive 5 years, Destatis 2023 on 2018 starters
12
French firms 42% 5-year survival INSEE 2023
13
Brazilian businesses 35% survive 5 years SEBRAE 2023
14
Singapore 55% 5-year survival Enterprise SG 2023
15
South Africa 20-30% 5-year SME survival Stats SA 2023
16
Japan 50% 5-year survival METI 2023
17
Italy 35% 5-year survival ISTAT 2023
18
Spain 40% 5-year INE 2023
19
Netherlands 50% 5-year CBS 2023
20
Sweden 55% 5-year SCB 2023
21
15% of US startups still operating after 20 years per Census 2023 LBD data
22
Bootstrapped firms twice as likely to survive 10 years vs VC-funded per SSRN 2023 study
23
Pandemic boosted 2-year survival for digital-first startups by 15% per McKinsey 2023
24
B2B SaaS median lifespan 8 years before acquisition/failure per SaaS Metrics 2023
25
Consumer apps 90% gone in 2 years App Annie 2023
Interpretation
Survival and Longevity Interpretation
The cold, hard truth of entrepreneurship is that simply launching a business is a statistically guaranteed way to become a footnote, yet somehow the relentless, foolish, and glorious human gamble on a better idea continues to populate the world with both ghost companies and gilded empires.
Reference
Cite This Report
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APA
Timothy Grant. (2026, February 13). Business Failure Statistics. Gitnux. https://gitnux.org/business-failure-statistics
MLA
Timothy Grant. "Business Failure Statistics." Gitnux, 13 Feb 2026, https://gitnux.org/business-failure-statistics.
Chicago
Timothy Grant. 2026. "Business Failure Statistics." Gitnux. https://gitnux.org/business-failure-statistics.
Sources & references
84 datasets cited across this report · attribution is report-level
shopify.com