Quick verdict: About one in five new US business locations closes within its first year, roughly half are gone within five years, and about two in three are gone within ten. The latest Bureau of Labor Statistics data show 22.1% of establishments opened in the year to March 2024 had closed by March 2025, 51.4% of the 2020 class were still open after five years, and 34.7% of the 2015 class were still open after ten.
What changed in 2026: business bankruptcy filings rose 16.9% to 26,941 in the year to June 30, 2026, and the most cited reason venture backed startups shut down is still running out of cash (70% of 431 shutdowns studied by CB Insights). The popular claim that 90% of businesses fail is not what the government data shows.
Updated October 9, 2026. Every figure was checked against the BLS, SBA, Census, Federal Reserve, US Courts and CB Insights pages linked below.
What percentage of new businesses fail in the first year?
About 22%. Of the 988,310 private sector establishments that opened in the year to March 2024, 769,449 were still operating in March 2025, a survival rate of 77.9%, according to the BLS survival table. That means 22.1% closed inside twelve months.
That figure has been remarkably steady for three decades. The class that opened in the year to March 1994 had a first year survival rate of 79.6%, and every class since has landed between roughly 75% and 81%. The worst recent first year was the class of 2022, at 76.3%, which was also the biggest class on record with 1,065,228 openings.
One detail matters when you read any failure statistic: BLS counts establishments, meaning individual business locations with employees. A closed location is not always a bankrupt company. Some owners sell, merge, move or simply retire, and those exits show up in the same column as a collapse.
How many businesses survive five, ten and twenty years?
Roughly half survive five years, one third survive ten and one fifth survive twenty. The table below reads the latest BLS cohorts, each measured to March 2025, so every row is the freshest available reading for that age.
| Years since opening | Class measured | Still open in March 2025 | Closed |
|---|---|---|---|
| 1 year | Opened year to March 2024 | 77.9% | 22.1% |
| 2 years | Opened year to March 2023 | 65.9% | 34.1% |
| 3 years | Opened year to March 2022 | 56.3% | 43.7% |
| 5 years | Opened year to March 2020 | 51.4% | 48.6% |
| 10 years | Opened year to March 2015 | 34.7% | 65.3% |
| 20 years | Opened year to March 2005 | 19.5% | 80.5% |
| 31 years | Opened year to March 1994 | 12.6% | 87.4% |
The SBA Office of Advocacy averages the same BLS series over every class from 1994 to 2022 and gets almost identical results: 67.7% survive two years, 49.2% survive five, 33.9% survive ten and 25.5% survive fifteen, per its 2026 small business FAQ.
When is a business most likely to fail?
In year one, by a wide margin. Follow the class of 2015 through the curve above and the first year takes 20.4 points off the starting line. The second year takes another 10.5 points, the third 7.7 and the fourth 6.0. After that the losses keep shrinking, to about three points a year by the second half of the decade.
The risk drops sharply once a business proves itself. In the BLS table, the share of last year’s survivors that make it through another year climbs from about 75% to 81% in year one to about 95% or 96% for businesses that have been open more than a decade. The SBA puts it another way: 69.5% of businesses that reach five years also reach ten, and 76.1% of those that reach ten reach fifteen.
Survivors also grow. The class of 2015 opened with an average of 4.4 employees per location. The ones still open in 2025 averaged 11.7, so a smaller number of businesses ends up employing close to the original headcount.
Which industries have the highest business failure rates?
Mining and oil and gas, information, and professional services fail fastest over ten years. Agriculture, utilities and manufacturing last longest. The table pulls each industry’s own BLS survival table, using the same cohorts as above.
| Industry | Open after 1 year | After 5 years | After 10 years | After 20 years |
|---|---|---|---|---|
| Agriculture, forestry, fishing and hunting | 85.7% | 61.8% | 53.0% | 29.8% |
| Utilities | 76.9% | 61.6% | 47.2% | 33.1% |
| Manufacturing | 80.1% | 58.4% | 45.3% | 26.0% |
| Real estate and rental and leasing | 81.0% | 57.9% | 45.0% | 18.0% |
| Retail trade | 84.4% | 59.8% | 44.2% | 25.1% |
| Educational services | 78.4% | 58.2% | 43.1% | 23.1% |
| Construction | 79.7% | 56.5% | 42.6% | 16.1% |
| Other services | 82.6% | 60.0% | 42.1% | 21.6% |
| Accommodation and food services | 85.3% | 59.3% | 41.6% | 22.4% |
| Arts, entertainment and recreation | 78.4% | 57.1% | 40.8% | 16.3% |
| Finance and insurance | 79.2% | 53.8% | 38.4% | 19.9% |
| Administrative and waste services | 75.7% | 51.5% | 37.0% | 19.3% |
| Health care and social assistance | 82.1% | 52.6% | 36.4% | 22.3% |
| Transportation and warehousing | 77.0% | 52.7% | 36.1% | 16.6% |
| Management of companies | 80.5% | 52.1% | 35.8% | 25.8% |
| All private industries | 77.9% | 51.4% | 34.7% | 19.5% |
| Wholesale trade | 79.5% | 51.2% | 34.4% | 16.2% |
| Professional, scientific and technical | 74.5% | 50.8% | 34.3% | 17.0% |
| Information | 71.6% | 45.7% | 30.0% | 13.5% |
| Mining, quarrying, oil and gas | 77.7% | 48.5% | 24.5% | 17.7% |
Do restaurants really fail more than other businesses?
Not in the BLS data. Accommodation and food services had a first year survival rate of 85.3%, second only to agriculture, and 41.6% of the 2015 class was still open after ten years, seven points better than the all industry average. Restaurants feel risky because there are so many of them, so the absolute number of closures is large, but the rate is not unusually high.
Why do information and tech businesses close so fast?
Information, which covers publishing, software, telecom and data services, lost 28.4% of its newest class in a single year, the worst of any sector. Professional services, where most consultancies and agencies sit, were second worst at 25.5%. Both need little capital to start, so more marginal ideas get tested and closed quickly. You can read the sector tables from the BLS establishment age page.
How many businesses open and close each year?
About a million open, and nearly as many close. BLS counted 980,333 new establishments in the year to March 2025, well above the 569,387 that opened in 1994. The SBA reports that 1.3 million establishments opened for the first time in 2023 while about 1.2 million closed permanently.
Quarterly figures are the most current. In the fourth quarter of 2025 there were 338,000 establishment births, which created 1,006,000 jobs, per the latest BLS BED release. Closure data lag by three quarters; the latest, for the first quarter of 2025, shows 284,000 establishment deaths and 809,000 jobs lost, according to the BLS births and deaths table.
| Quarter | Establishment births | Establishment deaths | Death rate |
|---|---|---|---|
| Q2 2020 (pandemic shock) | 227,000 | 325,000 | 4.0% |
| Q4 2023 | 327,000 | 322,000 | 3.5% |
| Q4 2024 | 324,000 | 306,000 | 3.3% |
| Q1 2025 (latest deaths) | 328,000 | 284,000 | 3.0% |
| Q4 2025 (latest births) | 338,000 | Not yet published | Not yet published |
New applications are still coming. The Census Bureau counted 531,728 seasonally adjusted business applications in August 2026, down 7.8% from July, and projects 28,501 of that month’s applications will become employer businesses within four quarters, per its Business Formation Statistics release.
Are business bankruptcies rising in 2026?
Yes, for the fourth year running. Business bankruptcy filings rose 16.9%, from 23,043 to 26,941, in the year ending June 30, 2026, according to US Courts data. Chapter 11 filings, the reorganisation route most used by larger companies, rose from 8,408 to 10,320.
| Year ending June 30 | Business filings | Chapter 11 filings (all filers) | Change in business filings |
|---|---|---|---|
| 2022 | 12,748 | 4,429 | Low point |
| 2023 | 15,724 | 5,986 | Up 23% (our arithmetic) |
| 2024 | 22,060 | 8,717 | Up 40% (our arithmetic) |
| 2025 | 23,043 | 8,408 | Up 4% (our arithmetic) |
| 2026 | 26,941 | 10,320 | Up 16.9% |
Keep the scale in mind. Business filings have more than doubled since 2022 by Work Insiders arithmetic, yet 26,941 filings in a year is small next to roughly 284,000 establishment closures in a single quarter. Most businesses that close never see a bankruptcy court.
Why do businesses fail?
Cash runs out, but that is usually the last symptom rather than the cause. CB Insights studied 431 venture backed startups that shut down since 2023 and found reasons for 385 of them. Most cited more than one reason, so the shares add up to more than 100%.
| Reason cited in shutdowns | Share of failed startups | What it usually means |
|---|---|---|
| Ran out of capital | 70% | The final cause, after something else went wrong |
| Poor product market fit | 43% | Customers never wanted it enough to pay |
| Bad timing or macro conditions | 29% | Raised on a trend that did not last |
| Unsustainable unit economics | 19% | Every sale lost money |
The same CB Insights study found the median failed startup had raised $11 million and died 22 months after its last funding round. Two thirds were shrinking headcount in the six months before shutting down, and nearly a third closed with ten or fewer employees.
What problems do ordinary small businesses report?
Costs, customers and staff. In the Federal Reserve’s survey of 6,525 small employer firms, rising costs of goods, services or wages was the top financial challenge, and 77% reported rising costs, tariff costs or both. Reaching customers was the top operational challenge, followed by hiring or retaining qualified staff, per the Fed credit survey.
Financing is a pressure point too. Sixty percent of firms applied for financing in the prior year, most often to cover operating expenses, and 22% of applicants received none of what they asked for. Expectations for revenue growth fell to their lowest level since the 2020 survey.
Is it true that 90% of businesses fail?
No. The government data does not support it. Even after 31 years, 12.6% of the establishments that opened in 1994 are still running, and two thirds of new businesses survive at least two years. The 90% figure does not appear anywhere in the BLS or SBA survival data used on this page.
| Popular claim | What the data shows | Source |
|---|---|---|
| 90% of businesses fail | 65.3% of the 2015 class closed within ten years | BLS |
| Half fail in the first year | 22.1% closed in the first year | BLS |
| Restaurants are the riskiest business | Food and accommodation beat the average at one, five and ten years | BLS |
| Startups fail because they run out of money | Cash is the final cause in 70%; product market fit sits behind 43% | CB Insights |
| Most failures end in bankruptcy | About 27,000 business filings a year against hundreds of thousands of closures | US Courts, BLS |
How many small businesses are there in the US?
There are 36,207,130 small businesses, 99.9% of all US firms, according to the SBA. Only 6,395,635 of them have paid employees; the other 29.8 million are owner only. Small businesses employ 62.3 million people, 45.9% of private sector workers, which is why their survival rates move the job market.
That is also why the BLS survival figures above, which cover employer establishments, are the right benchmark for anyone hiring. If you run a small company, our guides to small business recruiting software and the real cost per hire show what each new hire costs, and the cost of a bad hire shows what a wrong one costs a young business.
How we built this page
Survival rates come from the BLS Business Employment Dynamics Table 7 files for total private industry and for each sector, last updated December 2025 and measured to March 2025. Births, deaths and bankruptcies come from the latest BLS and US Courts releases. Closed percentages, point changes and year on year bankruptcy changes not stated by the source are Work Insiders arithmetic on those published numbers and are labelled. We removed older third party figures that we could not trace to a primary source. Our companion page on small business failure covers the owner side.
Quick answers
What is the business failure rate in the first year?
22.1% of US establishments that opened in the year to March 2024 had closed by March 2025, per BLS. The long run range is roughly 20% to 25%.
What percentage of businesses fail within five years?
About half. 48.6% of the class that opened in the year to March 2020 had closed by March 2025. The SBA’s average across 1994 to 2022 is a 49.2% five year survival rate.
What percentage of businesses survive ten years?
34.7% of the 2015 class was still open in 2025, so about two in three close within a decade.
Which industry has the highest failure rate?
Information has the worst first year (28.4% closed). Mining, quarrying and oil and gas has the worst ten year record, with only 24.5% still open.
Which industry has the best survival rate?
Agriculture, forestry, fishing and hunting leads at one year (85.7%), five years (61.8%) and ten years (53.0%). Utilities lead at twenty years (33.1%).
What is the number one reason startups fail?
Running out of capital is cited in 70% of venture backed shutdowns, but CB Insights calls it the final cause. Poor product market fit, at 43%, is the most common root cause.
Are business bankruptcies going up?
Yes. Filings rose 16.9% to 26,941 in the year to June 30, 2026, more than double the 12,748 filed in the year to June 2022.
Do most businesses fail?
Over a long enough period most close, but not quickly. Half last five years, a third last ten and about one in five last twenty.
The bottom line
The real US business failure rate is about 22% in year one, about 50% by year five and about 65% by year ten, and those numbers have barely moved since the 1990s. The first two years do most of the damage; a business that has lasted a decade survives each further year at rates of roughly 93% to 96%.
The causes are dull and fixable: customers who do not want the product enough, costs that rise faster than prices, and cash that runs out before either is solved. Hiring and keeping good people is the second biggest day to day problem small firms report, which makes every early hire count.
Sources: BLS survival table, BLS establishment age, BLS BED release, BLS births and deaths, SBA small business FAQ, Census business formation, US Courts bankruptcies, Fed credit survey, CB Insights shutdowns
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