Small Business Failure Statistics
Last updated: 2026-10-28 · 11 sourced statistics
The usual line that 20% of businesses fail in year one and half by year five is close to what the official data shows, once you read it precisely. In the US Bureau of Labor Statistics survival tables (data to March 2025), 77.9% of establishments opened in the year to March 2024 were still operating a year later, so 22.1% closed in their first year. Of those opened in the year to March 2020, 51.4% were still open five years on. The SBA Office of Advocacy's February 2026 averages across cohorts since 1994 tell the same story: 49.2% survive five years and 33.9% survive ten. This page sets out those survival rates, the Census Bureau's count of employer firms that closed outright, how the odds improve with age, and what these numbers do and do not measure.
Key takeaways
- 22.1% of US establishments opened in the year to March 2024 had closed by March 2025; 77.9% survived their first year (BLS).
- 51.4% of establishments opened in the year to March 2020 were still open five years later, and 34.7% of the 2015 cohort reached ten years.
- Survival improves with age: 69.5% of establishments that reach five years also reach ten (SBA Office of Advocacy, 1994 to 2022 average).
- 523,958 US employer firms closed entirely in 2023, and firms aged one to five years accounted for about half of those closures (Census Business Dynamics Statistics).
At a glance.
Every figure on this page in one table, each linked to its named source. Scroll down for the full context behind each number.
| Figure | What it measures | Source | Year |
|---|---|---|---|
| 77.9% | 77.9% of US private sector establishments opened in the year ended March 2024 were still operating in March 2025, meaning 22.1% closed within their first year. | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of private sector establishments by opening year (Table 7) | 2025 |
| 75% to 81% | First-year survival has stayed in a narrow band for three decades: across opening cohorts from 1994 to 2024 it ranged from 75.2% (opened in the year to March 2008) to 80.9% (opened in the year to March 2020). | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of private sector establishments by opening year (Table 7) | 2025 |
| 51.4% | 51.4% of establishments opened in the year ended March 2020 were still open in March 2025, a five-year survival rate in line with the roughly one-in-two pattern seen since the 1990s. | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of private sector establishments by opening year (Table 7) | 2025 |
| 34.7% | 34.7% of establishments opened in the year ended March 2015 survived ten years to March 2025. | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of private sector establishments by opening year (Table 7) | 2025 |
| 19.5% | 19.5% of establishments opened in the year ended March 2005 were still operating 20 years later, and 12.6% of the 1994 cohort were still open in March 2025. | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of private sector establishments by opening year (Table 7) | 2025 |
| 74.5% | In professional, scientific and technical services (consultants, designers, accountants, IT services), 74.5% of establishments opened in the year to March 2024 survived their first year and 50.8% of the 2020 cohort survived five years. | US Bureau of Labor Statistics, Business Employment Dynamics: Survival of establishments by opening year, Professional, Scientific, and Technical Services (Table 7) | 2025 |
| 49.2% | Averaged over opening cohorts from 1994 to 2022, 67.7% of new employer establishments survived at least two years, 49.2% five years, 33.9% ten years and 25.5% fifteen years. | SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026) | 2026 |
| 69.5% | Survival odds rise with age: 69.5% of establishments that reach five years also reach ten, and 76.1% of those that reach ten also reach fifteen. | SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026) | 2026 |
| 1.2M closed | In 2023, about 1.3 million US business establishments opened for the first time and about 1.2 million closed permanently. | SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026) | 2026 |
| 523,958 | 523,958 US employer firms shut down entirely in 2023 (a firm death means every establishment the firm owned closed), out of 5,593,727 employer firms. | US Census Bureau, Business Dynamics Statistics 2023 (national time series) | 2023 |
| 49% | Young firms carry most of the risk: employer firms aged one to five years accounted for 258,117, or about 49%, of the 523,958 firm deaths in 2023 (our sum of the Census firm-age table). | US Census Bureau, Business Dynamics Statistics 2023 (by firm age) | 2023 |
The statistics
77.9% of US private sector establishments opened in the year ended March 2024 were still operating in March 2025, meaning 22.1% closed within their first year.
First-year survival has stayed in a narrow band for three decades: across opening cohorts from 1994 to 2024 it ranged from 75.2% (opened in the year to March 2008) to 80.9% (opened in the year to March 2020).
51.4% of establishments opened in the year ended March 2020 were still open in March 2025, a five-year survival rate in line with the roughly one-in-two pattern seen since the 1990s.
34.7% of establishments opened in the year ended March 2015 survived ten years to March 2025.
19.5% of establishments opened in the year ended March 2005 were still operating 20 years later, and 12.6% of the 1994 cohort were still open in March 2025.
In professional, scientific and technical services (consultants, designers, accountants, IT services), 74.5% of establishments opened in the year to March 2024 survived their first year and 50.8% of the 2020 cohort survived five years.
Averaged over opening cohorts from 1994 to 2022, 67.7% of new employer establishments survived at least two years, 49.2% five years, 33.9% ten years and 25.5% fifteen years.
Source:SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026)2026
Survival odds rise with age: 69.5% of establishments that reach five years also reach ten, and 76.1% of those that reach ten also reach fifteen.
Source:SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026)2026
In 2023, about 1.3 million US business establishments opened for the first time and about 1.2 million closed permanently.
Source:SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026)2026
523,958 US employer firms shut down entirely in 2023 (a firm death means every establishment the firm owned closed), out of 5,593,727 employer firms.
Source:US Census Bureau, Business Dynamics Statistics 2023 (national time series)2023
Young firms carry most of the risk: employer firms aged one to five years accounted for 258,117, or about 49%, of the 523,958 firm deaths in 2023 (our sum of the Census firm-age table).
Source:US Census Bureau, Business Dynamics Statistics 2023 (by firm age)2023
When these numbers don't apply
Aggregate statistics hide a lot. Read these caveats before quoting a figure as if it describes your specific situation.
- BLS Business Employment Dynamics tracks establishments (single business locations with employees), not firms. A firm that closes one of three shops shows up as one closed establishment, and owner-only businesses with no payroll are not counted at all.
- A closure is not the same as a failure. The survival tables count every establishment that stops reporting employment, which includes owners who retire, sell the business, merge it or close it voluntarily while still solvent.
- Each survival figure belongs to one opening cohort measured to March 2025. Cohorts opened in recession years (for example 2008) had lower first-year survival than cohorts opened in expansion years, so a single year's rate is not a law of nature.
- Industry survival tables are published separately and are not a breakdown that sums to the all-industry table, so compare an industry with the total only as a rough guide.
- No official US statistic records why businesses close. The widely repeated claim that 82% of small businesses fail because of cash flow problems is not included because we could not find a primary study that states it.
- All figures are for the United States. UK and EU closure rates use different registers and definitions.
How we compiled this data
Reviewed 2026-10-28. Survival rates come from the US Bureau of Labor Statistics Business Employment Dynamics Table 7 (survival of private sector establishments by opening year, data to March 2025, last modified 17 December 2025), read through Internet Archive captures of the official text files because bls.gov blocks automated access; shares not stated directly (22.1%) are 100% minus the BLS survival rate. Long-run averages and the 2023 opening and closing counts come from the SBA Office of Advocacy's Frequently Asked Questions About Small Business (February 2026), which draws on the same BLS data. Firm closures come from the US Census Bureau's Business Dynamics Statistics 2023 CSV files; the 49% share is our sum of firm deaths for firms aged one to five. Earlier versions of this page cited an 82% cash-flow failure figure, a UK late-payment closure estimate and a startup post-mortem survey; they were removed because the first has no traceable primary source, the second is a 2016 counterfactual estimate for a different country, and startup post-mortems belong on our startup statistics page.
We hand-collected each figure from its original publisher rather than recycling secondary round-ups, cross-checked the headline numbers against the source documents in 2026-10-28, and link every statistic to the report it came from so you can verify it yourself. Where a publisher issues annual updates, we cite the report edition and flag the year inline.
Frequently asked questions
What percentage of small businesses fail in the first year?
In the latest BLS data, 22.1% of US establishments opened in the year to March 2024 had closed by March 2025, so 77.9% survived their first year. Across cohorts since 1994, first-year survival has ranged from about 75% to 81%.
Do half of all businesses fail within five years?
Roughly, yes. 51.4% of establishments opened in the year to March 2020 were still open in March 2025 (BLS), and the SBA Office of Advocacy's 1994 to 2022 average five-year survival rate is 49.2%. Not every closure is a failure: some owners sell, retire or close a profitable business.
How many businesses survive ten years?
34.7% of establishments opened in the year to March 2015 were still operating ten years later, close to the SBA's long-run ten-year average of 33.9%. Once a business reaches five years, its chance of reaching ten is 69.5%.
Is it true that 82% of businesses fail because of cash flow?
We could not trace that figure to a primary study; it circulates through secondary articles attributing it to a U.S. Bank analysis. Official US statistics count closures but do not record their causes, so no government figure states why businesses close.
How many US businesses close each year?
About 1.2 million establishments closed permanently in 2023, against about 1.3 million that opened (SBA Office of Advocacy). Counting whole firms rather than locations, 523,958 employer firms shut down entirely in 2023 (Census Business Dynamics Statistics).
Are consultants and other service businesses more likely to fail?
In professional, scientific and technical services, 74.5% of establishments opened in the year to March 2024 survived their first year, below the 77.9% all-industry rate, while five-year survival for the 2020 cohort (50.8%) was close to the overall 51.4%.
What does this mean for a business that sends invoices?
The first five years are when about half of new establishments close, so cash discipline matters most early on: invoice as soon as work is delivered, agree short payment terms and follow up on overdue invoices before they become a cash gap. Our cash flow and late payment statistics pages cover how common those strains are.
Put these figures to use
- Payments hub: Guides on payment terms, methods and getting invoices paid on time.
- Profit margin calculator: Check the margin on a job or service from its price and costs.
- What is a healthy profit margin? How to set your target: Set a margin that pays you, funds reserves and reinvestment, then stress-test it.
- Automatic payment reminders: how to set up a schedule: When to send each invoice reminder before and after the due date.
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