New Business Survival Rates

Abstract

Federal business survival data is remarkably consistent, and remarkably specific about what it actually measures. Using U.S. Bureau of Labor Statistics and Small Business Administration data, this report shows that roughly one in five new U.S. businesses close within their first year, that the five-year survival rate has held in a narrow 45.4% to 51.9% band across every cohort tracked since 1994, and that 69.5% of five-year survivors go on to reach ten years. It is also direct about a real limitation: federal survival data does not isolate early marketing investment as a specific, quantified predictor of survival, and this report states that plainly rather than overstating a causal claim the data does not support.

Methodology

This report was prepared by Make It Loud as part of its North Atlanta Small Business Research Series. It is based on the U.S. Bureau of Labor Statistics' Business Employment Dynamics data, which tracks business survival through payroll and employer identification records across a specific opening cohort followed over time, and the U.S. Small Business Administration's complementary survival rate reporting. Figures reflect specific cohort years and vary modestly across different reporting sources and cohort start dates; this report presents commonly cited ranges rather than a single precise figure where genuine variance exists. This data series specifically tracks employer establishments, businesses with at least one payroll employee, and does not capture solo, non-employer businesses. This report explicitly did not identify a rigorous statistical study isolating early marketing investment as a specific, quantified predictor of business survival, and presents the relationship between marketing and survival as a reasonable inference from commonly cited failure-cause research rather than a directly proven causal statistic. This report does not constitute business, financial, or marketing advice, and does not guarantee survival outcomes for any individual business.

Findings

Bureau of Labor Statistics data consistently finds roughly one in five new U.S. businesses close within their first year, with the 2015 cohort showing a 20.4% first-year failure rate and more recent cohorts running between roughly 21% and 24%, while SBA data finds 67.7% to 67.9% of new employer establishments survive their first two years. The commonly repeated claim that half of small businesses fail is inaccurate as a first-year statistic but becomes accurate at the five-year mark, where the survival rate has held in a narrow 45.4% to 51.9% band, averaging 49.3%, across every cohort tracked since 1994. Survival odds vary substantially by industry, with five-year failure rates ranging from 29.4% in agriculture to 59.8% in mining, quarrying, and oil and gas extraction. Surviving the first five years improves the odds going forward: 69.5% of five-year survivors reach ten years, and 76.5% of ten-year survivors reach fifteen years. Federal survival data does not isolate early marketing investment as a quantified predictor of survival; marketing and visibility appear among the commonly cited reasons businesses fail, which is a real but more modest claim than a direct, quantified causal link.

Overview

Federal business survival data is remarkably consistent, and remarkably specific about what it actually measures. Roughly one in five new U.S. businesses close within their first year, based on Bureau of Labor Statistics tracking. By the five-year mark, that survival rate settles to roughly 49%, a figure that has held in a narrow 45.4% to 51.9% band across every business cohort tracked since 1994. What the data does not offer is a single, clean statistic proving that early marketing investment specifically raises survival odds by a defined percentage. What it does offer, credibly and consistently, is a documented list of the most commonly cited reasons businesses fail, several of which, insufficient customer demand, inadequate visibility, and poor market fit, sit squarely in territory marketing exists to address. This report presents both the hard survival numbers and that honest limitation clearly, rather than overstating a causal claim the data does not directly support.

This report lays out exactly what the odds look like at each stage of a new business’s life, from the first year through the fifteen-year mark, how those odds vary meaningfully by industry, why surviving the earliest years specifically improves long-term prospects, and what the data does and does not establish about the role of marketing.

Finding 1: About 1 in 5 new businesses do not make it to their second year

Bureau of Labor Statistics data, tracking businesses through payroll and employer identification records rather than self-reported survey data, consistently finds that roughly one in five new U.S. businesses close within their first year of operation. Specific cohort figures cluster closely: the 2015 opening cohort showed a 20.4% first-year failure rate, while more recent cohorts, including the March 2024 opening group, have run somewhat higher, between roughly 21% and 24%, suggesting first-year failure risk may be trending modestly upward in the most current data available. The U.S. Small Business Administration’s own complementary figures find 67.7% to 67.9% of new employer establishments survive their first two years specifically, a useful bridge statistic between the one-year and five-year benchmarks most commonly cited.

It is worth noting directly that this federal data specifically tracks employer establishments, meaning business locations with at least one person on payroll. Solo businesses with no employees, which actually outnumber employer businesses nationally, are not captured in this specific data series, meaning broader self-employment survival patterns may differ from the figures presented throughout this report.

Finding 2: The five-year mark is where the half of businesses fail claim actually becomes accurate

The commonly repeated claim that half of small businesses fail is inaccurate as a first-year statistic, but becomes genuinely accurate at the five-year mark specifically. BLS data finds roughly 48% to 50% of new businesses fail within five years, depending on the specific cohort measured, with figures across multiple independent analyses clustering closely: 48.6%, 48.9%, 49.2%, and 49.4% all appear across different reporting sources and cohort years. Most notably, this five-year survival rate has remained in a narrow 45.4% to 51.9% band, averaging 49.3%, across every business cohort the BLS has tracked since 1994, a genuinely remarkable degree of consistency given how much the broader economy has changed over that three-decade span.

This consistency is itself a meaningful finding: whatever specific economic conditions a new business launches into, boom or downturn, the roughly coin-flip odds of reaching five years have proven durable across three decades of tracking, suggesting the underlying survival dynamics of new businesses are driven more by consistent structural factors than by any single economic cycle.

Finding 3: Which industry you are in changes the odds substantially

Survival odds vary considerably by industry, and the spread is wide enough to matter directly for how a new business should think about risk. BLS data finds five-year failure rates ranging from 29.4% for agriculture, the most resilient sector measured, up to 59.8% for mining, quarrying, and oil and gas extraction, with the information sector close behind at 53.2%. Retail trade performs comparatively well at a 38.3% five-year failure rate, better than the roughly 49% cross-industry average. Looking at first-year survival specifically, the range across industries runs from 74.9% to 87.5% depending on sector, and that gap widens further by the ten-year mark, where industry survival rates range from 24.5% up to 50.5%.

This industry-level variation is a useful, practical planning input for any new business owner: benchmarking survival expectations against the specific industry a business operates in, rather than the general cross-industry average, produces a meaningfully more accurate picture of the actual risk landscape a specific venture is entering.

Finding 4: Surviving the first five years meaningfully improves the odds going forward

Business survival is not a flat, unchanging probability applied fresh each year; the data shows the odds genuinely improve once a business clears its earliest, riskiest period. BLS data finds that among businesses that survive their first five years, 69.5% go on to reach the ten-year mark, a considerably better rate than the roughly 49% survival probability those same businesses faced getting from founding to year five in the first place. That pattern continues: among businesses that reach the ten-year mark, 76.5% continue operating through year fifteen. This produces a clear overall shape to business risk: the steepest, most dangerous period is the first five years, and each subsequent milestone a business survives brings meaningfully better odds of reaching the next one.

This finding carries a specific, practical implication for how a new business should think about its earliest years: the disproportionate effort and investment many owners put into the first five years specifically, rather than spreading resources evenly across a business’s full lifespan, is well aligned with where the actual survival risk documented in this data concentrates most heavily.

Finding 5: What actually causes businesses to fail, and an honest limit on what the data shows about marketing

Federal survival data documents when businesses close, but explaining why requires drawing on a different body of research, and it is important to be precise about what that research actually establishes. Compiled industry analysis of business failure commonly cites a consistent set of contributing factors: insufficient planning, inadequate funding, poor management, intense competition, and lack of market demand, with inadequate marketing and visibility appearing among the commonly cited factors in that broader list. Separate research specific to venture-backed startups found running out of capital (70%), poor product-market fit (43%), and bad timing (29%) as the most commonly cited failure causes in that specific, higher-funded segment of the business population, though these figures do not necessarily generalize to the broader small business population this report otherwise covers.

This report is deliberately direct about a real limitation here: this research did not identify a rigorous, controlled statistical study directly isolating early marketing investment as a specific, quantified predictor of business survival, the kind of clean statistic (businesses that invest in marketing early survive at X% higher rates) that would make the strongest possible case. What the available data does support is that lack of market demand and visibility appear consistently among the commonly cited reasons businesses fail, which is a real and relevant finding, just a different, more modest claim than a direct, quantified causal link. Presenting this distinction honestly matters more than overstating a connection the data does not directly prove.

A note on this finding specifically: marketing’s role in business survival is a reasonable, widely cited factor among several contributing causes of failure, not an isolated, independently measured statistic in the federal survival data this report otherwise relies on. Readers and prospective clients deserve that distinction stated plainly rather than implied away.

What this means for new North Atlanta businesses

Plan your first five years as the highest-risk period, and budget accordingly. Given how heavily survival risk concentrates in the first five years specifically, and how much the odds improve after that point, front-loading planning rigor, cash reserves, and strategic attention into this window aligns directly with where the actual data-documented risk sits.

Benchmark your own odds against your specific industry, not the general average. Given how widely survival rates vary by sector, understanding where your specific industry falls on that spectrum gives a more accurate risk picture than relying on the commonly cited but broad cross-industry figures.

Treat visibility and demand generation as one real factor among several, not a silver bullet. Given the honest limitation in Finding 5, a new business should weigh marketing investment as one legitimate, commonly cited contributor to survival odds alongside funding, management, and market fit, rather than assuming marketing alone determines the outcome.

Recognize that reaching year five is a genuine milestone worth measuring progress against. Given the documented jump in survival odds after the five-year mark, treating that specific milestone as a meaningful internal benchmark, not just an arbitrary number, reflects what the data actually shows about how business risk changes over time.

The data: business survival reference

Figures reflect federal survival data tracked through payroll and employer records; solo, non-employer businesses are not captured in this specific data series. This report does not constitute a guarantee of survival outcomes for any individual business.

A note on how Make It Loud approaches this

Make It Loud offers New Business Start Up Consulting to help North Atlanta entrepreneurs navigate the specific, highest-risk early years this report documents, including the market visibility and demand-generation work commonly cited among the contributing factors in business survival. This report is part of an ongoing research series examining what actually determines whether North Atlanta small businesses succeed.

As Finding 5 makes explicit, federal survival data does not isolate marketing as a quantified predictor of survival, and this report presents the relationship between marketing and survival as a reasonable inference from commonly cited failure-cause research rather than a directly proven causal statistic. This report does not constitute business, financial, or marketing advice, and does not guarantee survival outcomes for any individual business.

These findings inform our SEO and Web Design services, which support the market visibility and demand-generation work that sits among the contributing factors in business survival.