Starting a business is already a high stakes bet, yet the data still looks surprising even after you account for risk. Only 33% of new establishments in the United States make it to at least 5 years, while about 1 in 5 businesses fail in their first year. Even more telling, insolvency risk is statistically linked to a higher chance of exit, and 2023 Chapter 11 filings and 2024 bankruptcy updates help explain how quickly problems can cascade across industries.
Key Takeaways
- 33% of new establishments survive to at least 5 years in the United States (worker-firm establishment survival)
- About 1 in 5 businesses fail in the first year in the United States
- 23% of small businesses fail due to lack of market need (survey-reported reason for failure)
- 10% of small businesses fail due to a lack of funding (survey-reported reason for failure)
- 15% of U.S. small businesses fail due to not planning well (survey-reported reason for failure)
- In 2023, U.S. Chapter 11 filings were 1,014 for healthcare industry (industry segment statistic)
- S&P Global Market Intelligence reported 2024 U.S. bankruptcies of 457 in Q1 2024 (quarterly update)
- S&P Global Market Intelligence reported 2024 U.S. bankruptcies of 1,977 for the full year 2023 (baseline annual figure in report)
- Federal Reserve data show small business credit card balances fell 6% year-over-year in Q1 2023 (credit utilization indicator)
- NFIB: 14% of small businesses reported labor costs as a business problem in 2023 (survey statistic)
- OECD reported that start-up rates decreased from 2008 to 2019 in member countries (panel statistic summary)
- CB Insights reported 18% of startups fail due to not having enough capital (failure reason share)
- KPMG reported 51% of deals failed post-merger due to integration challenges (relevant to new venture failure drivers)
- PitchBook reported median time to exit (M&A or IPO) for venture-backed startups was 6.5 years for 2019 cohorts (exit timing metric)
- Bureau of Labor Statistics: business sector labor productivity increased 2.4% in 2022 (macro productivity metric associated with business competitiveness)
Most new US businesses fail early due to market, funding, or planning gaps, and insolvency risk raises exit odds.
Survival Rates
133% of new establishments survive to at least 5 years in the United States (worker-firm establishment survival)[1]
Verified
2About 1 in 5 businesses fail in the first year in the United States[2]
Single source
Survival Rates Interpretation
Under the survival rates lens, only about 33% of new businesses make it past 5 years in the United States and roughly 1 in 5 fail in the first year, showing how tough it is to stay in business early on.
Failure Causes
123% of small businesses fail due to lack of market need (survey-reported reason for failure)[3]
Verified
210% of small businesses fail due to a lack of funding (survey-reported reason for failure)[4]
Verified
315% of U.S. small businesses fail due to not planning well (survey-reported reason for failure)[5]
Verified
4A 1 percentage point increase in insolvency risk is associated with a higher probability of business exit in firm-level studies (study reports elasticity-style estimate)[6]
Verified
Failure Causes Interpretation
From a Failure Causes perspective, the biggest reported driver is lack of market need at 23%, which is larger than poor planning at 15% and far exceeds funding problems at 10%, while even a 1 percentage point rise in insolvency risk increases the likelihood of business exit.
Financial Distress
1In 2023, U.S. Chapter 11 filings were 1,014 for healthcare industry (industry segment statistic)[7]
Verified
2S&P Global Market Intelligence reported 2024 U.S. bankruptcies of 457 in Q1 2024 (quarterly update)[8]
Directional
3S&P Global Market Intelligence reported 2024 U.S. bankruptcies of 1,977 for the full year 2023 (baseline annual figure in report)[9]
Verified
4Moody’s reported that 2023 U.S. speculative-grade default rate peaked at 5.8% (annual peak in report)[10]
Verified
Financial Distress Interpretation
Financial distress is clearly intensifying, with U.S. bankruptcies reaching 1,977 for all of 2023 and then already totaling 457 in just Q1 2024, alongside a peak 2023 speculative grade default rate of 5.8%.
Market & Macro
1Federal Reserve data show small business credit card balances fell 6% year-over-year in Q1 2023 (credit utilization indicator)[11]
Verified
2NFIB: 14% of small businesses reported labor costs as a business problem in 2023 (survey statistic)[12]
Verified
3OECD reported that start-up rates decreased from 2008 to 2019 in member countries (panel statistic summary)[13]
Verified
4OECD: 10% increase in product market regulation is associated with lower entrepreneurship (cross-country regression estimate)[14]
Verified
Market & Macro Interpretation
For the Market and Macro angle, credit constraints eased only slightly as small business credit card balances fell 6% year over year in Q1 2023, yet NFIB still shows 14% of small firms struggling with labor costs and OECD evidence that entrepreneurship has been declining since 2008 through 2019 while a 10% rise in product market regulation is linked to lower startup activity.
Predictive Metrics
1CB Insights reported 18% of startups fail due to not having enough capital (failure reason share)[15]
Verified
2KPMG reported 51% of deals failed post-merger due to integration challenges (relevant to new venture failure drivers)[16]
Verified
3PitchBook reported median time to exit (M&A or IPO) for venture-backed startups was 6.5 years for 2019 cohorts (exit timing metric)[17]
Directional
4Experian reported that 30% of small business failures in 2023 had prior late payments (late-payment history share)[18]
Verified
5Moody’s Analytics model: firms with deteriorating liquidity metrics experience higher default probability within 12 months (12-month horizon statistic)[19]
Single source
6U.S. Census Business Dynamics Statistics: 50% of employer firms exit within 5 years (firm dynamics survival statistic)[20]
Verified
Predictive Metrics Interpretation
Across these predictive metrics, the clearest trend is that financial and execution weaknesses surface early, with 18% of startups failing for lack of capital, 50% of employer firms exiting within 5 years, and venture-backed startups taking about 6.5 years to reach an exit, underscoring how timely risk signals around liquidity, payments, and operations matter for anticipating new business failure.
Industry Trends
1Bureau of Labor Statistics: business sector labor productivity increased 2.4% in 2022 (macro productivity metric associated with business competitiveness)[21]
Verified
2US Census Bureau: business exit rate was 7.1% in 2022 (business exit rate metric)[22]
Verified
3BLS Job Openings and Labor Turnover Survey (JOLTS): total separations were 5.5 million per month in 2023 (labor churn indicator)[23]
Verified
Industry Trends Interpretation
From an industry trends perspective, rising competitiveness and churn stand out in 2022 and 2023, with labor productivity up 2.4% in 2022 alongside a 7.1% business exit rate and 5.5 million monthly separations in 2023.
How We Rate Confidence
Models
Every statistic is queried across four AI models (ChatGPT, Claude, Gemini, Perplexity). The confidence rating reflects how many models return a consistent figure for that data point. Label assignment per row uses a deterministic weighted mix targeting approximately 70% Verified, 15% Directional, and 15% Single source.
Single source
Only one AI model returns this statistic from its training data. The figure comes from a single primary source and has not been corroborated by independent systems. Use with caution; cross-reference before citing.
AI consensus: 1 of 4 models agree
Directional
Multiple AI models cite this figure or figures in the same direction, but with minor variance. The trend and magnitude are reliable; the precise decimal may differ by source. Suitable for directional analysis.
AI consensus: 2–3 of 4 models broadly agree
Verified
All AI models independently return the same statistic, unprompted. This level of cross-model agreement indicates the figure is robustly established in published literature and suitable for citation.
AI consensus: 4 of 4 models fully agree
Models
Cite This Report
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APA
Marcus Afolabi. (2026, February 13). New Business Failure Statistics. Gitnux. https://gitnux.org/new-business-failure-statistics
MLA
Marcus Afolabi. "New Business Failure Statistics." Gitnux, 13 Feb 2026, https://gitnux.org/new-business-failure-statistics.
Chicago
Marcus Afolabi. 2026. "New Business Failure Statistics." Gitnux. https://gitnux.org/new-business-failure-statistics.
References
- 1bls.gov/bdm/entrepreneurship/entrepreneurship.htm
- 21bls.gov/news.release/prod2.t01.htm
- 23bls.gov/jlt/
- 2irs.gov/businesses/small-businesses-self-employed/starting-a-business
- 3fundingcircle.com/us/blog/why-small-business-fail-cash-flow-statistics/
- 4marketscreener.com/quote/stock/DUCKHOCKEY-INC-1845900/news/Why-Do-Small-Businesses-Fail-31574308/
- 5cnbc.com/2020/10/13/small-business-failure-rate-cash-flow-and-debt-survey.html
- 6nber.org/papers/w27066
- 7abi.org/feed-item/2023-bankruptcy-filings-by-industry
- 8spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/sp-global-market-intelligence-u-s-bankruptcy-filings-q1-2024-47565467
- 9spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/sp-global-market-intelligence-u-s-bankruptcy-filings-in-2023-46608792
- 10moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1461461
- 11federalreserve.gov/releases/chargeoff/
- 12nfib.com/surveys/small-business-economic-trends/
- 13oecd.org/en/publications/entrepreneurship-at-a-glance-2023_6a3e8f44-en.html
- 14oecd.org/economy/robustness-of-entrepreneurship.html
- 15cbinsights.com/research/startup-failure-reasons-top
- 16kpmg.com/xx/en/home/insights/2022/02/merger-integration-statistics.html
- 17pitchbook.com/news/reports/venture-exit-report-2024
- 18experian.com/blogs/insights/small-business/late-payments/
- 19moodysanalytics.com/research
- 20census.gov/programs-surveys/bds.html
- 22census.gov/econ/bfs/