Small Business Failure Statistics
Last updated: June 2026 · 6 sourced statistics
The survival curve for new businesses is well documented and remarkably stable across decades: roughly one in five fails within a year, about half are gone by year five, and two-thirds by year ten. The leading proximate cause is almost always the same — running out of cash. Sources: BLS Business Employment Dynamics, CB Insights, and U.S. Bank research.
Key takeaways
- About 1 in 5 new businesses fails within the first year (BLS).
- Roughly half of new businesses close within five years.
- 82% of business failures involve cash flow problems (U.S. Bank study).
The statistics
Around 22% of new US private-sector businesses fail within their first year, per BLS Business Employment Dynamics data.
Source:US Bureau of Labor Statistics (Business Employment Dynamics)2024
Roughly half of new businesses close within five years — the five-year survival rate hovers near 50% across decades of BLS data.
Source:US Bureau of Labor Statistics2024
About two-thirds of new businesses are gone within ten years (BLS).
Source:US Bureau of Labor Statistics2024
82% of business failures involve cash flow problems, per a widely cited U.S. Bank study.
Source:U.S. Bank study (via SCORE)2019
'Ran out of cash / failed to raise new capital' is the most commonly cited startup failure reason in CB Insights' post-mortem analysis, appearing in 38% of cases.
Source:CB Insights, Top Reasons Startups Fail2021
An estimated 50,000 UK businesses close each year specifically due to late payments (Federation of Small Businesses).
Source:Federation of Small Businesses (UK)2023
Methodology & sources
Compiled June 2026 from BLS Business Employment Dynamics survival tables, CB Insights startup post-mortems, U.S. Bank research as published by SCORE, and FSB campaign data. Survival rates are economy-wide averages — industry and cohort timing shift them several points.
Frequently asked questions
What percentage of small businesses fail?
About 22% in year one, ~50% by year five, and ~65% by year ten (BLS) — figures that have been remarkably stable for decades.
What's the number one reason businesses fail?
Cash flow. The U.S. Bank study found 82% of failures involve cash flow problems, and CB Insights ranks 'ran out of cash' as the top startup killer.
Do late payments really kill businesses?
Yes — the FSB estimates 50,000 UK business closures annually from late payment alone. Profitable businesses fail when receivables don't convert to cash in time.
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