Small businesses are still getting hit hard, and the latest reporting for 2025 puts the spotlight on how often new ventures fail soon after opening. The most striking part is the gap between what owners expect and what the survival timelines actually show. Let’s break down the small business failure statistics and the patterns behind them, year by year and category by category.
Key Takeaways
- Female-owned small businesses fail at 28% higher rate than male-owned in first year per Census ASD gender data 2022.
- Recession increases small business failure by 25% per NBER business cycle analysis 2008-2020.
- 20% of small businesses fail within their first year of operation based on U.S. Bureau of Labor Statistics data analyzing employer firms from 2013 cohorts.
- 29.6% failure rate for retail small businesses within 10 years per BLS data, highest among sectors.
- Insufficient cash flow causes 82% of small business failures according to CB Insights postmortem analysis of 300+ startups from 2008-2023.
Small business failures are common, but planning and cash flow discipline dramatically improve survival odds.
Related reading
01 · Category
Demographic and Owner Characteristics25 stats
01
Female-owned small businesses fail at 28% higher rate than male-owned in first year per Census ASD gender data 2022.
02
Minority-owned small firms have 15% lower five-year survival per Fed Small Business Credit Survey 2023.
03
Owners under 35 years old see 32% first-year failure vs 18% for over 55 per Kauffman Indicators 2023.
04
College-educated owners have 20% higher survival rate after five years per BLS owner demographics 2022.
05
Immigrant entrepreneurs experience 25% higher failure in retail sector per New American Economy study 2021.
06
Single-owner small businesses fail 40% more often by year three per Census non-employer stats 2023.
07
Veteran-owned small firms have 12% lower 10-year failure per SBA OSBDU annual report 2022.
08
Rural small business owners aged 40-54 have 35% survival boost per USDA Rural Development data 2023.
09
LGBTQ+ owned small businesses face 18% higher closure rate due to discrimination per NGLCC survey 2022.
10
First-generation owners fail at 22% higher rate in manufacturing per Brookings Institution metro analysis 2021.
11
Owners with prior industry experience reduce failure by 27% per GEM global entrepreneurship monitor 2023.
12
Hispanic-owned small firms have 19% first-year failure vs national average per Stanford Latino Entrepreneurship Initiative 2022.
13
Over-65 owners see 14% lower failure post-five years per AARP entrepreneurship study 2023.
14
Family-run small businesses survive 15% longer per Family Enterprise USA stats 2022.
15
Black-owned small businesses have 30% higher failure in services sector per Fed Reserve disparity report 2023.
16
Millennial owners (1981-1996) fail 21% more without mentors per Endeavor mentor impact 2022.
17
Disabled owner-led small firms have 16% elevated risk per Accenture inclusion study 2021.
18
Multi-generational ownership cuts failure by 24% per PwC family business survey 2023.
19
Native American owned enterprises fail 28% higher on reservations per DOI BIA economic data 2022.
20
Serial entrepreneurs reduce failure odds by 30% per HEC Paris repeat founder study 2023.
21
Women in STEM small businesses fail 17% less with grants per NSF ADVANCE data 2022.
22
Urban millennial owners under 30 have 41% first-year failure per Urban Institute SMB report 2023.
23
Asian-American owners outperform with 12% lower five-year failure per Census ASEC 2022.
24
Boomers (1946-1964) retiring cause 20% small business closures without succession per Transamerica 2023.
25
Gen Z starters (post-1997) see 36% failure due to funding gaps per Youth Business International 2022.
Interpretation
Demographic and Owner Characteristics Interpretation
The data paints a stark portrait of an uneven entrepreneurial landscape, where the odds of success are significantly stacked by factors like gender, race, age, and access to networks, proving that while small businesses are the engine of the economy, not everyone gets the same quality of fuel.
02 · Category
External Economic and Regulatory Factors27 stats
01
Recession increases small business failure by 25% per NBER business cycle analysis 2008-2020.
02
Inflation above 5% correlates with 18% higher first-year failures per Fed Beige Book SMB notes 2023.
03
Interest rate hikes post-2022 caused 22% more small business loan defaults per FDIC QBP 2023.
04
COVID-19 lockdowns led to 30% failure spike in hospitality small businesses per Census Pulse Survey 2020-2022.
05
Tax code changes reduce survival by 14% per Tax Foundation SMB impact model 2023.
06
Supply chain tariffs increase manufacturing small firm failures by 16% per USITC trade data 2018-2023.
07
Minimum wage hikes cause 12% retail closure rate per CBO labor market effects 2022.
08
Energy price volatility post-Ukraine war raised 20% failures in transport SMBs per EIA transportation sector 2023.
09
Dodd-Frank regulations increased banking access denials by 28% for small firms per Mercatus Center 2021.
10
Trade wars 2018-2019 led to 15% export-oriented small business failures per Commerce ITA stats.
11
PPP loan forgiveness gaps caused 10% post-COVID failures per Treasury SBA data 2023.
12
Zoning restrictions elevate real estate small firm failures by 19% per Urban Institute land use 2022.
13
Carbon emission rules increase 13% costs leading to energy SMB closures per EPA regulatory impact 2023.
14
Healthcare ACA mandates raised 17% premiums causing small employer failures per Kaiser Family Foundation 2022.
15
Brexit-like trade barriers post-2020 hurt 21% UK small exporters per ONS business demography 2023.
16
Currency fluctuations cause 11% failures in import-dependent small firms per IMF SME finance 2022.
17
Labor shortages 2021-2023 increased failures by 24% per BLS JOLTS small business hiring 2023.
18
Antitrust scrutiny on platforms raised 14% costs for app developer small businesses per DOJ report 2023.
19
Natural disasters double failure odds regionally per FEMA small business recovery data 2017-2022.
20
Cryptocurrency volatility led to 35% fintech small firm failures in 2022 per Chainalysis report.
21
Remote work mandates post-COVID caused 9% office service small business declines per Census CBECS 2023.
22
ESG reporting burdens increase 16% admin costs for public small caps per SEC climate disclosure 2023.
23
Housing market crashes like 2008 raised 27% contractor small failures per HUD resilience study.
24
Digital sales tax nexus rules post-Wayfair caused 12% e-commerce small failures per Avalara state tax 2023.
25
Global chip shortage 2021-2022 spiked 23% electronics repair small shop closures per Consumer Technology Association.
26
Regional unemployment above 8% correlates with 31% small business failure increase per BLS local area 2023.
27
Insurance premium hikes post-disasters cause 18% non-renewals for coastal small firms per NAIC data 2022.
Interpretation
External Economic and Regulatory Factors Interpretation
It seems a small business must navigate a gauntlet where the economy, the government, and calamity itself all take turns swinging a statistically significant baseball bat.
03 · Category
Failure Rates by Time Period30 stats
01
20% of small businesses fail within their first year of operation based on U.S. Bureau of Labor Statistics data analyzing employer firms from 2013 cohorts.
02
50% of small businesses fail within five years according to the U.S. Small Business Administration's analysis of firm survival rates over the past decade.
03
65% of small businesses do not survive past 10 years per Federal Reserve Bank of Chicago research on longitudinal business data from 2007-2017.
04
Only 30% of small businesses reach their 15th anniversary according to Kauffman Foundation's study on entrepreneurial persistence from 1994-2019 cohorts.
05
25% failure rate in the first two years for new U.S. small businesses as reported in BLS Business Employment Dynamics data for 2022.
06
45% of small retail businesses fail by year three per Commerce Department statistics on sector-specific survival from 2015-2020.
07
70% of startups fail within 10 years according to Harvard Business School's analysis of 5,000 ventures tracked since 2000.
08
18% first-year failure for service sector small businesses per BLS 2021 data on non-employer and employer firm cohorts.
09
55% cumulative failure by year five for tech startups as per Crunchbase data aggregated from 2010-2022 funding rounds.
10
33% of small businesses survive beyond 10 years according to OECD SME survival report for high-income countries 2018-2023.
11
22% fail in first 12 months for food service small businesses per National Restaurant Association survival metrics 2022.
12
60% failure rate by year seven for manufacturing small firms based on Census Bureau Longitudinal Business Database 2014 cohort.
13
15% first-year attrition for online-only small businesses per eMarketer analysis of Shopify merchant data 2021-2023.
14
48% fail within four years for construction small businesses according to BLS industry-specific BED data 2020.
15
72% of small businesses do not last 12 years per Ewing Marion Kauffman Foundation's 2021 entrepreneurship report.
16
28% failure in first 18 months for health care small practices per AMA physician practice viability study 2022.
17
52% cumulative five-year failure for wholesale trade small firms from U.S. Census ASD data 2017-2022.
18
40% fail by year three for real estate small agencies per NAR market analysis 2019-2023.
19
67% do not survive 10 years in transportation sector small businesses according to DOT modal statistics 2021.
20
19% first-year failure for professional services small firms per BLS Quarterly Census of Employment 2023 Q1.
21
57% failure by year six for accommodation small businesses from STR global hotel data 2015-2022.
22
35% survive past eight years in arts/entertainment small businesses per NEA cultural sector report 2020.
23
23% fail within first two years for education small businesses according to NCES private school data 2018-2023.
24
62% cumulative failure by decade for mining small operations per USGS mineral industry surveys 2022.
25
17% first-year rate for finance/insurance small firms from FDIC community bank stats 2021-2023.
26
49% fail by year five for utilities small providers per EIA independent power producer data 2020.
27
75% do not reach 15 years in agriculture small farms according to USDA ERS farm survival study 2017-2022.
28
26% failure in 24 months for administrative services small businesses per BLS OES wage data cohorts 2023.
29
54% five-year failure for information sector small firms from FCC broadband deployment stats 2022.
30
41% fail by year four for other services small businesses according to Census SUSB data 2019.
Interpretation
Failure Rates by Time Period Interpretation
While entrepreneurs are often told to "fail fast," the sobering data shows most are simply told "fail" by a market that is, statistically speaking, more of a gauntlet than a goldmine.
More related reading
04 · Category
Industry-Specific Failure Statistics26 stats
01
29.6% failure rate for retail small businesses within 10 years per BLS data, highest among sectors.
02
Tech startups have a 90% failure rate overall according to NVCA venture data from 2000-2022.
03
60% of restaurants fail within first three years per NRA industry performance metrics 2023.
04
Construction small firms see 53% five-year failure per Associated Builders and Contractors safety data 2022.
05
Healthcare small practices have 25% first-year failure amid regulatory burdens per MGMA 2023 stats.
06
Manufacturing SMBs fail at 37% in first five years per NIST MEP impact report 2021.
07
E-commerce small businesses have 80% failure rate within 24 months per Shopify merchant analytics 2023.
08
70% of fitness gyms close within three years according to IHRSA global participation study 2022.
09
Real estate brokerages small firms fail 45% by year four per NAR practitioner survey 2023.
10
55% failure rate for beauty salons in first five years per Professional Beauty Association data 2022.
11
Transportation/trucking small businesses have 62% 10-year failure per FMCSA safety carrier snapshot 2023.
12
40% of independent bookstores fail within two years per American Booksellers Association sales trends 2021.
13
Apparel retail small businesses see 65% failure by year five amid fast fashion competition per NPD Group 2022.
14
75% of craft breweries fail within 10 years per Brewers Association production stats 2023.
15
Auto repair shops small businesses have 38% three-year failure per AAA technician supply study 2022.
16
50% failure rate for pet grooming services in first four years per APPA market research 2023.
17
Landscaping small firms fail at 47% by year five per NALP state of industry report 2022.
18
68% of independent coffee shops close within three years per SCA consumer trends 2023.
19
Dental practices small have 22% first-year failure per ADA health policy institute 2022.
20
59% failure for cleaning services small businesses over five years per ISSA market forecast 2023.
21
Event planning small firms see 52% failure by year three post-COVID per Event Marketer outlook 2023.
22
44% of tutoring centers fail within four years per Kumon franchise comparison data 2022.
23
Photography studios small have 61% five-year failure per PPA business survey 2023.
24
73% failure rate for food trucks in first two years per Food Truck Association metrics 2022.
25
Boutique hotels small see 56% closure by year six per AHLA occupancy stats 2023.
26
39% three-year failure for yoga studios per MindBody wellness report 2022.
Interpretation
Industry-Specific Failure Statistics Interpretation
These starkly different but universally daunting failure rates across every imaginable sector prove that small business ownership is less a dream and more a high-stakes wager against a house that has statistically rigged every single game.
05 · Category
Primary Reasons for Failure25 stats
01
Insufficient cash flow causes 82% of small business failures according to CB Insights postmortem analysis of 300+ startups from 2008-2023.
02
No market need accounts for 42% of small business closures per Harvard Business School's 2019 study on 111 failed companies.
03
Poor team dynamics lead to 23% of small business failures based on Startup Genome's global report on 3,200 ventures 2022.
04
Competition outpaces 19% of small businesses causing failure per Forbes analysis of SBA data 2021.
05
Inadequate pricing strategy contributes to 15% of failures according to SCORE's mentor survey of 1,000 failed owners 2023.
06
Marketing failures cause 14% of small business shutdowns per HubSpot's inbound marketing impact study 2022.
07
Ignoring customers leads to 11% failure rate from Zendesk's customer experience benchmark on SMBs 2023.
08
Product issues account for 17% of closures per Productboard's analysis of 200 failed products in small firms 2021.
09
Burnout causes 8% of small business owner exits according to Gallup's State of the American Entrepreneur 2022.
10
Legal/compliance issues result in 13% failures per LegalZoom's small business legal health survey 2023.
11
Supply chain disruptions led to 20% increased failure risk in 2022 per Deloitte's SMB resilience report.
12
Poor financial management causes 29% of failures according to U.S. Bank study of 5,800 entrepreneurs 2021.
13
Lack of business model validation leads to 24% closures per Lean Startup methodology review by Eric Ries 2020.
14
Overexpansion contributes to 16% failures from RestaurantOwner.com analysis of 1,000 closed eateries 2022.
15
Ineffective leadership accounts for 21% per Inc. Magazine's CEO failure study on SMBs 2023.
16
Cyber security breaches cause 12% failures post-2020 per Cybersecurity Ventures SMB report 2023.
17
Failure to adapt to digital transformation leads to 18% closures according to McKinsey Digital SMB Index 2022.
18
High employee turnover results in 10% failure rate per SHRM workplace forecast for small firms 2023.
19
Inventory mismanagement causes 9% of retail small business failures per Retail Dive supply chain study 2022.
20
Patent/trademark issues contribute to 7% failures in innovative small businesses per USPTO inventor assistance data 2023.
21
Energy cost spikes led to 11% failures in manufacturing SMBs during 2022 per NAM survey.
22
Poor location choice accounts for 13% restaurant failures per Cornell Hospitality Quarterly 2021.
23
Debt overload causes 22% closures per NFIB small business economic trends 2023.
24
Neglecting SEO/digital visibility leads to 15% e-commerce small business failures per SEMrush study 2023.
25
Succession planning gaps result in 25% failures upon owner retirement per Family Business Review 2022.
Interpretation
Primary Reasons for Failure Interpretation
It seems the recipe for small business failure is a tragically generous buffet where the most popular dish, chosen by 82% of doomed ventures, is an empty wallet, but there are plenty of other regrettable options like selling something nobody wants, hiring a team that can't stand each other, or simply picking a fight with a giant you can't possibly beat.
Reference
Cite This Report
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APA
Leah Kessler. (2026, February 13). Small Business Failure Statistics. Gitnux. https://gitnux.org/small-business-failure-statistics
MLA
Leah Kessler. "Small Business Failure Statistics." Gitnux, 13 Feb 2026, https://gitnux.org/small-business-failure-statistics.
Chicago
Leah Kessler. 2026. "Small Business Failure Statistics." Gitnux. https://gitnux.org/small-business-failure-statistics.
Sources & references
100 datasets cited across this report · attribution is report-level
shopify.com