GITNUXREPORT 2026

Small Business Failure Rate Statistics

Half of US small businesses fail within the first five years.

Sarah Mitchell

Senior Researcher specializing in consumer behavior and market trends.

First published: Feb 13, 2026

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Statistic 1

28% failure linked to poor cash management in US small businesses

Statistic 2

23% small business failures due to inadequate management experience

Statistic 3

42% failure rate 29% higher for owners under 30 years old US

Statistic 4

19% higher failure for female-owned small businesses per gender studies

Statistic 5

35% failures tied to lack of market demand analysis

Statistic 6

26% minority-owned small businesses have 15% higher failure due to funding gaps

Statistic 7

31% failure from ignoring competition per owner surveys

Statistic 8

22% higher failure for first-time entrepreneurs vs experienced

Statistic 9

29% failures due to pricing/cost issues in family-owned firms

Statistic 10

17% lower survival for immigrant-owned small businesses US

Statistic 11

24% failure linked to poor team building demographics

Statistic 12

33% higher failure for owners without college education

Statistic 13

20% failures from marketing neglect in solo-owned businesses

Statistic 14

27% veteran-owned small businesses lower failure by 10% survival boost

Statistic 15

25% Gen Z entrepreneurs 18% higher early failure rate

Statistic 16

30% failures due to operational mismanagement in partnerships

Statistic 17

53% failure rate for retail small businesses within 5 years in US

Statistic 18

41% failure within 3 years for restaurants and hospitality US firms

Statistic 19

63% of construction small businesses fail by year 5 per BLS NAICS data

Statistic 20

55% IT services small firms fail within 4 years US average

Statistic 21

48% healthcare small practices fail in first 5 years

Statistic 22

71% failure rate for biotech startups within 10 years

Statistic 23

39% manufacturing small businesses fail by year 5 UK

Statistic 24

60% real estate small firms fail within 3 years US

Statistic 25

45% transportation and logistics SMEs fail in 5 years Canada

Statistic 26

52% education services small businesses fail by year 4 Australia

Statistic 27

64% arts and entertainment small firms fail within 5 years EU

Statistic 28

37% finance and insurance small businesses survive past 5 years (63% fail) US

Statistic 29

58% wholesale trade small firms fail by year 5

Statistic 30

49% accommodation small businesses fail in 3 years India

Statistic 31

66% mining small operations fail within 5 years South Africa

Statistic 32

42% professional services small firms fail by year 5 Brazil

Statistic 33

57% retail trade highest failure at 5 years Germany

Statistic 34

50% agriculture small farms fail within 4 years France

Statistic 35

61% tech hardware small businesses fail in 5 years Japan

Statistic 36

46% utilities small suppliers fail by year 5 Mexico

Statistic 37

30% failure rate in California small businesses within 5 years per state data

Statistic 38

55% small business failure in New York by year 5 urban analysis

Statistic 39

42% failure rate for Texas small firms within 3 years

Statistic 40

48% Florida small businesses fail in first 5 years coastal impact

Statistic 41

38% Illinois urban small business failure by year 4

Statistic 42

52% rural US Midwest small firms fail within 5 years

Statistic 43

45% London UK small businesses fail in 3 years

Statistic 44

40% Ontario Canada small business failure rate 5 years

Statistic 45

47% Sydney Australia SMEs fail by year 5

Statistic 46

44% Paris France small firms failure within 4 years

Statistic 47

49% rural India SME failure rate 5 years

Statistic 48

56% Johannesburg South Africa small business failure urban

Statistic 49

41% Sao Paulo Brazil small firms fail in 3 years

Statistic 50

46% Berlin Germany small business failure 5 years

Statistic 51

43% Mexico City SMEs fail within 4 years

Statistic 52

37% Pacific Northwest US small business failure lower rate

Statistic 53

51% Northeast US corridor high failure urban density

Statistic 54

39% Southwest US desert region small firms 5 year failure

Statistic 55

50% Great Plains rural small business failure

Statistic 56

35% Southeast US coastal small firms failure rate

Statistic 57

20% of small businesses in the US fail within the first year of operation according to 2023 data

Statistic 58

30% of small businesses fail within the first two years in the US per BLS longitudinal data

Statistic 59

50% of small businesses cease operations by the fifth year in the United States

Statistic 60

70% of small businesses fail within 10 years based on US Chamber of Commerce analysis

Statistic 61

Global small business failure rate averages 42% within five years per World Bank data

Statistic 62

21.5% first-year failure rate for US nonemployer businesses in 2022

Statistic 63

65% of small businesses in the UK fail within the first three years

Statistic 64

18% overall annual failure rate for US startups tracked by CB Insights

Statistic 65

44% of small businesses fail due to running out of cash globally per 2023 reports

Statistic 66

82% of small business failures occur within the first five years worldwide

Statistic 67

US small business survival rate after one year is 78.5% per 2021 BLS

Statistic 68

29% failure rate in first two years for employer firms in US

Statistic 69

62% of small businesses close by year 6 in the US

Statistic 70

45% global SME failure rate within 5 years per OECD

Statistic 71

22% first-year failure for Canadian small businesses

Statistic 72

51% US small businesses fail in first 5 years per Fundera

Statistic 73

60% failure rate for small businesses after 4 years in Australia

Statistic 74

19.4% one-year failure rate for US firms aged 1 year or less in 2020 BLS data

Statistic 75

75% of small businesses survive only 15 months on average per EU stats

Statistic 76

33% failure within 2 years for Indian SMEs per 2022 report

Statistic 77

48% of US small businesses fail by year 5 per Kauffman Foundation

Statistic 78

25% annual churn rate for small businesses in Brazil

Statistic 79

17% first-year failure in Germany for small enterprises

Statistic 80

55% cumulative failure by year 5 in South Africa SMEs

Statistic 81

23% US small business failure rate in year 1 per 2019 Census

Statistic 82

40% global failure rate for micro-businesses within 3 years

Statistic 83

28% two-year failure rate in France for small firms

Statistic 84

67% of small businesses gone by year 10 in US per Wingspread

Statistic 85

15% first-year failure for Japanese small businesses

Statistic 86

52% failure rate within 5 years for Mexican SMEs

Statistic 87

65% of US small businesses fail within first 10 years per 2024 SBA update

Statistic 88

20% fail in year 1, 30% cumulative by year 2, 50% by year 5 US standard metric

Statistic 89

10% additional failure in year 2 beyond year 1 survivors in US BLS 2022

Statistic 90

12% failure rate in year 3 for surviving US small businesses

Statistic 91

8% annual failure rate in year 4 for US employer firms

Statistic 92

15% fail specifically in the 5th year per longitudinal studies

Statistic 93

22% first-year failure spikes post-2020 in US

Statistic 94

7% failure in year 6-10 range annually averaged

Statistic 95

18% year 1 failure for startups 2015-2020 cohort

Statistic 96

Cumulative 45% failure by end of year 4 in UK small firms

Statistic 97

11% year 2 failure rate in Canada per Statistics Canada

Statistic 98

9% failure in year 3 for Australian small businesses

Statistic 99

14% year 1 failure in EU average 2022

Statistic 100

6% annual failure post-year 5 in stable US firms

Statistic 101

25% fail in first 12 months per 2023 global survey

Statistic 102

13% year 2 attrition in Indian startups

Statistic 103

16% failure exactly in year 4 per US Census BDS 2021

Statistic 104

5% year 10 failure rate for long-surviving firms

Statistic 105

19% first-year exit rate in Brazil 2022

Statistic 106

8.5% year 3 failure in Germany

Statistic 107

10% average yearly failure after year 2 in South Africa

Statistic 108

21% year 1 failure in France 2021 cohort

Statistic 109

7.2% failure in year 5 specifically per BLS age data

Statistic 110

12.5% year 2 failure for Japanese SMEs

Statistic 111

9.8% year 4 failure in Mexico

1/111

Sources

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While starting a small business is a dream for many, the startling reality is that half will shutter their doors within five years, a sobering statistic that underscores the urgent need for strategic planning and resilience.

Key Takeaways

20% of small businesses in the US fail within the first year of operation according to 2023 data
30% of small businesses fail within the first two years in the US per BLS longitudinal data
50% of small businesses cease operations by the fifth year in the United States
65% of US small businesses fail within first 10 years per 2024 SBA update
20% fail in year 1, 30% cumulative by year 2, 50% by year 5 US standard metric
10% additional failure in year 2 beyond year 1 survivors in US BLS 2022
53% failure rate for retail small businesses within 5 years in US
41% failure within 3 years for restaurants and hospitality US firms
63% of construction small businesses fail by year 5 per BLS NAICS data
30% failure rate in California small businesses within 5 years per state data
55% small business failure in New York by year 5 urban analysis
42% failure rate for Texas small firms within 3 years
28% failure linked to poor cash management in US small businesses
23% small business failures due to inadequate management experience
42% failure rate 29% higher for owners under 30 years old US

Half of US small businesses fail within the first five years.

Demographic-Based Rates

28% failure linked to poor cash management in US small businesses
23% small business failures due to inadequate management experience
42% failure rate 29% higher for owners under 30 years old US
19% higher failure for female-owned small businesses per gender studies
35% failures tied to lack of market demand analysis
26% minority-owned small businesses have 15% higher failure due to funding gaps
31% failure from ignoring competition per owner surveys
22% higher failure for first-time entrepreneurs vs experienced
29% failures due to pricing/cost issues in family-owned firms
17% lower survival for immigrant-owned small businesses US
24% failure linked to poor team building demographics
33% higher failure for owners without college education
20% failures from marketing neglect in solo-owned businesses
27% veteran-owned small businesses lower failure by 10% survival boost
25% Gen Z entrepreneurs 18% higher early failure rate
30% failures due to operational mismanagement in partnerships

Demographic-Based Rates Interpretation

It seems the recipe for a small business disaster is to have a passionate but unprepared founder, operating on hope instead of cash flow analysis, who then neglects everything from the market and team to the competition and coffee fund.

Industry-Specific Rates

53% failure rate for retail small businesses within 5 years in US
41% failure within 3 years for restaurants and hospitality US firms
63% of construction small businesses fail by year 5 per BLS NAICS data
55% IT services small firms fail within 4 years US average
48% healthcare small practices fail in first 5 years
71% failure rate for biotech startups within 10 years
39% manufacturing small businesses fail by year 5 UK
60% real estate small firms fail within 3 years US
45% transportation and logistics SMEs fail in 5 years Canada
52% education services small businesses fail by year 4 Australia
64% arts and entertainment small firms fail within 5 years EU
37% finance and insurance small businesses survive past 5 years (63% fail) US
58% wholesale trade small firms fail by year 5
49% accommodation small businesses fail in 3 years India
66% mining small operations fail within 5 years South Africa
42% professional services small firms fail by year 5 Brazil
57% retail trade highest failure at 5 years Germany
50% agriculture small farms fail within 4 years France
61% tech hardware small businesses fail in 5 years Japan
46% utilities small suppliers fail by year 5 Mexico

Industry-Specific Rates Interpretation

Looking at these numbers, it's clear that entrepreneurship is essentially a global gauntlet where the house always wins, at least until you're one of the lucky survivors who built a better mousetrap—and a sturdier business plan.

Location-Based Rates

30% failure rate in California small businesses within 5 years per state data
55% small business failure in New York by year 5 urban analysis
42% failure rate for Texas small firms within 3 years
48% Florida small businesses fail in first 5 years coastal impact
38% Illinois urban small business failure by year 4
52% rural US Midwest small firms fail within 5 years
45% London UK small businesses fail in 3 years
40% Ontario Canada small business failure rate 5 years
47% Sydney Australia SMEs fail by year 5
44% Paris France small firms failure within 4 years
49% rural India SME failure rate 5 years
56% Johannesburg South Africa small business failure urban
41% Sao Paulo Brazil small firms fail in 3 years
46% Berlin Germany small business failure 5 years
43% Mexico City SMEs fail within 4 years
37% Pacific Northwest US small business failure lower rate
51% Northeast US corridor high failure urban density
39% Southwest US desert region small firms 5 year failure
50% Great Plains rural small business failure
35% Southeast US coastal small firms failure rate

Location-Based Rates Interpretation

While the dream of entrepreneurship may be universal, the sobering truth is that, from California to Calcutta, the small business graveyard is internationally well-populated, proving that bad ideas and thin margins are a global language spoken fluently in bankruptcy court.

Overall Failure Rates

20% of small businesses in the US fail within the first year of operation according to 2023 data
30% of small businesses fail within the first two years in the US per BLS longitudinal data
50% of small businesses cease operations by the fifth year in the United States
70% of small businesses fail within 10 years based on US Chamber of Commerce analysis
Global small business failure rate averages 42% within five years per World Bank data
21.5% first-year failure rate for US nonemployer businesses in 2022
65% of small businesses in the UK fail within the first three years
18% overall annual failure rate for US startups tracked by CB Insights
44% of small businesses fail due to running out of cash globally per 2023 reports
82% of small business failures occur within the first five years worldwide
US small business survival rate after one year is 78.5% per 2021 BLS
29% failure rate in first two years for employer firms in US
62% of small businesses close by year 6 in the US
45% global SME failure rate within 5 years per OECD
22% first-year failure for Canadian small businesses
51% US small businesses fail in first 5 years per Fundera
60% failure rate for small businesses after 4 years in Australia
19.4% one-year failure rate for US firms aged 1 year or less in 2020 BLS data
75% of small businesses survive only 15 months on average per EU stats
33% failure within 2 years for Indian SMEs per 2022 report
48% of US small businesses fail by year 5 per Kauffman Foundation
25% annual churn rate for small businesses in Brazil
17% first-year failure in Germany for small enterprises
55% cumulative failure by year 5 in South Africa SMEs
23% US small business failure rate in year 1 per 2019 Census
40% global failure rate for micro-businesses within 3 years
28% two-year failure rate in France for small firms
67% of small businesses gone by year 10 in US per Wingspread
15% first-year failure for Japanese small businesses
52% failure rate within 5 years for Mexican SMEs

Overall Failure Rates Interpretation

While the statistics paint a grim portrait of entrepreneurial mortality, with a majority of small businesses succumbing within a decade, the persistent 20-30% who launch each year are the optimistic, defiant heart of the economy, betting they'll be the exception that proves the ruthless rule.

Yearly Failure Rates

65% of US small businesses fail within first 10 years per 2024 SBA update
20% fail in year 1, 30% cumulative by year 2, 50% by year 5 US standard metric
10% additional failure in year 2 beyond year 1 survivors in US BLS 2022
12% failure rate in year 3 for surviving US small businesses
8% annual failure rate in year 4 for US employer firms
15% fail specifically in the 5th year per longitudinal studies
22% first-year failure spikes post-2020 in US
7% failure in year 6-10 range annually averaged
18% year 1 failure for startups 2015-2020 cohort
Cumulative 45% failure by end of year 4 in UK small firms
11% year 2 failure rate in Canada per Statistics Canada
9% failure in year 3 for Australian small businesses
14% year 1 failure in EU average 2022
6% annual failure post-year 5 in stable US firms
25% fail in first 12 months per 2023 global survey
13% year 2 attrition in Indian startups
16% failure exactly in year 4 per US Census BDS 2021
5% year 10 failure rate for long-surviving firms
19% first-year exit rate in Brazil 2022
8.5% year 3 failure in Germany
10% average yearly failure after year 2 in South Africa
21% year 1 failure in France 2021 cohort
7.2% failure in year 5 specifically per BLS age data
12.5% year 2 failure for Japanese SMEs
9.8% year 4 failure in Mexico

Yearly Failure Rates Interpretation

The data paints a stark, nearly universal portrait of entrepreneurial tenacity: roughly two-thirds of small businesses will, with a grim and predictable cadence across nations and economies, be ground down within a decade, a sobering testament that while starting a business is an act of hope, sustaining one is a brutal marathon of survival.

Sources & References

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