Editorial corrections verified September 15, 2026. Fixed edition: BLS Business Employment Dynamics through March 2025.
“Half of all businesses fail in five years” gets repeated everywhere, usually without a source. Here is the source: the Bureau of Labor Statistics tracks every private-sector establishment from the year it opens, in every state. This page reports survival (still reporting employment) at one, five, and ten years — and out past thirty — nationally and for all 50 states plus DC, plus national rates for 19 industries. An establishment exit is not the same as an owner “business failure” — retirements, sales, mergers, and relocations also end the record.
Key Business Survival Statistics
- 77.9% of new establishments survive their first year — meaning about 22.1% close within twelve months of opening.
- 51.4% survive five years. The folklore claim that “half of businesses fail in five years” is roughly in the same ballpark for employer establishments: 48.6% of the March 2020 cohort no longer reported employment by March 2025 (exits include non-failure endings).
- 34.7% survive ten years — roughly one in three establishments opened in 2015 was still operating in 2025.
- The best 5-year survival is in Pennsylvania (57.1%); the lowest is Washington (42.2%) — a 14.9-point spread between states.
- The businesses currently measured at the 5-year mark opened in March 2020, at the onset of the pandemic — and still survived at 51.4%, slightly above the 49.3% average of every cohort tracked since 1994.
- Of the establishments opened in March 1994, 12.6% were still operating in March 2025 — thirty-one years later. And survivors grow: the average 2015 opening began with 4.4 employees, while its surviving establishments now average 11.7.
Survival Rates by State
Ranked by 5-year survival — the share of establishments opened in March 2020 still operating in March 2025. Each column tracks a different opening cohort: the 1-year column follows businesses opened in March 2024, the 10-year column the March 2015 cohort, and the 30+ column the March 1994 cohort — the oldest the BLS publishes, now 31 years on. Click any state for its full startup guide.
| Rank | State | 1-year | 5-year | 10-year | 15-year | 20-year | 30+ years |
|---|---|---|---|---|---|---|---|
| — | United States | 77.9% | 51.4% | 34.7% | 25.5% | 19.5% | 12.6% |
| 1 | Pennsylvania | 78.8% | 57.1% | 36.4% | 26.2% | 24.7% | 18.7% |
| 2 | South Carolina | 82.3% | 55.9% | 35.7% | 25.9% | 20.1% | 13.7% |
| 3 | Illinois | 79.7% | 55.6% | 38.4% | 27% | 19.9% | 13.7% |
| 4 | Michigan | 77.6% | 55.0% | 35.7% | 28.8% | 20% | 13.8% |
| 5 | Maine | 76.9% | 54.9% | 37.6% | 29.7% | 20.1% | 16.5% |
| 6 | Minnesota | 79.4% | 54.9% | 41.9% | 30.3% | 22% | 13.5% |
| 7 | North Dakota | 79.1% | 54.4% | 32.8% | 32.1% | 29.6% | 19.3% |
| 8 | Ohio | 78.7% | 54.4% | 38.4% | 29.9% | 22.5% | 15.2% |
| 9 | Indiana | 79.5% | 54.3% | 38.5% | 28.4% | 21.4% | 17% |
| 10 | North Carolina | 76.1% | 54.2% | 37.2% | 27.4% | 22.1% | 14.3% |
| 11 | Kentucky | 78.7% | 54.1% | 36.4% | 29.9% | 22.5% | 14.1% |
| 12 | California | 80.3% | 53.7% | 34.1% | 25.3% | 17.2% | 9.1% |
| 13 | Iowa | 80.2% | 53.7% | 39.9% | 33.4% | 26% | 15.8% |
| 14 | West Virginia | 76.3% | 53.6% | 38.0% | 26.5% | 20.8% | 11% |
| 15 | Mississippi | 77.9% | 53.5% | 35.9% | 26.9% | 20.7% | 12.8% |
| 16 | Montana | 78.3% | 53.0% | 38.5% | 30.8% | 22.8% | 16.5% |
| 17 | Louisiana | 80.4% | 52.9% | 35.6% | 27.8% | 22.6% | 13.1% |
| 18 | Massachusetts | 76.4% | 52.7% | 36.2% | 30.5% | 23% | 14.6% |
| 19 | South Dakota | 78.5% | 52.7% | 38.8% | 33.1% | 27% | 19.8% |
| 20 | Texas | 78.4% | 52.5% | 36.6% | 27.9% | 23.3% | 16.1% |
| 21 | Wisconsin | 79.5% | 52.4% | 37.4% | 33.6% | 26.3% | 17.4% |
| 22 | Arizona | 79.0% | 52.1% | 34.3% | 24.9% | 18.9% | 13.4% |
| 23 | New York | 79.6% | 51.9% | 33.7% | 25.5% | 19.8% | 9.9% |
| 24 | Alabama | 77.1% | 51.4% | 36.4% | 27.6% | 21.3% | 12.2% |
| 25 | Connecticut | 78.2% | 51.1% | 31.2% | 26.9% | 17.8% | 15.7% |
| 26 | Hawaii | 77.1% | 51.0% | 41.9% | 29.1% | 23% | 15.6% |
| 27 | Nebraska | 78.8% | 50.9% | 32.6% | 31.9% | 25.5% | 16.8% |
| 28 | Alaska | 74.4% | 50.8% | 33.4% | 30.1% | 20.1% | 14.2% |
| 29 | New Jersey | 79.3% | 50.5% | 34.0% | 22.6% | 16.5% | 10.6% |
| 30 | Oklahoma | 73.5% | 50.2% | 31.9% | 23.6% | 21.8% | 11.7% |
| 31 | Maryland | 75.5% | 50.1% | 34.6% | 25.3% | 17.6% | 12.2% |
| 32 | Georgia | 75.1% | 49.9% | 32.1% | 24.5% | 20.3% | 10.4% |
| 33 | Utah | 76.3% | 49.7% | 35.5% | 27.3% | 22.5% | 12.6% |
| 34 | Florida | 76.0% | 49.5% | 34.0% | 23.5% | 15.3% | 10.2% |
| 35 | Virginia | 76.0% | 48.8% | 30.4% | 23% | 18.5% | 13.4% |
| 36 | Colorado | 75.9% | 48.5% | 31.9% | 23.8% | 17.1% | 10.9% |
| 37 | Delaware | 72.8% | 48.1% | 29.6% | 21.7% | 17.6% | 10.9% |
| 38 | Rhode Island | 77.9% | 48.1% | 33.3% | 26.9% | 18% | 13.3% |
| 39 | Arkansas | 76.6% | 48.0% | 31.8% | 23.9% | 21.7% | 13% |
| 40 | New Hampshire | 75.1% | 47.7% | 31.5% | 26.6% | 18.6% | 14.9% |
| 41 | Nevada | 75.9% | 47.6% | 32.9% | 27.4% | 21.3% | 12% |
| 42 | Wyoming | 75.2% | 47.5% | 28.9% | 23.8% | 18.5% | 13.3% |
| 43 | Kansas | 76.4% | 47.4% | 34.6% | 25.5% | 22.2% | 11.5% |
| 44 | Vermont | 75.9% | 46.6% | 35.4% | 27.6% | 21% | 16% |
| 45 | Tennessee | 70.7% | 46.4% | 32.8% | 25.1% | 19.4% | 12.8% |
| 46 | New Mexico | 77.0% | 46.3% | 27.4% | 23.3% | 19.3% | 11.3% |
| 47 | Oregon | 73.3% | 45.8% | 37.1% | 27.3% | 21.3% | 12.5% |
| 48 | Idaho | 76.6% | 45.6% | 33.3% | 25.5% | 19.7% | 13.1% |
| 49 | Missouri | 74.1% | 42.9% | 29.7% | 23.6% | 20.8% | 13.7% |
| 50 | District of Columbia | 67.1% | 42.4% | 27.3% | 23% | 14.6% | 11.1% |
| 51 | Washington | 82.5% | 42.2% | 31.7% | 10.6% | 13.1% | 10.2% |
Read the ranking with care: high survival is not the same as high opportunity. Fast-growth states run hotter churn — more openings, more closings — while slower states hold steadier. The 5-year ranking also rests on a single cohort — the businesses that opened in March 2020 — so expect state order to shift as the 2021 and 2022 cohorts reach their five-year marks in coming releases. That is why several of the fastest-forming states in our Best States to Start a Business study sit mid-table here, and why the two datasets are worth reading together. For what new businesses borrow — and how often those loans are charged off — see our SBA loan statistics. If you are starting a cleaning company in Tennessee, where 46.4% of new establishments were still operating after five years, see our guide to Tennessee cleaning business license requirements.
Survival by Industry
The BLS publishes industry survival nationally only — there is no official state-by-industry survival rate, here or anywhere. Ranked by 5-year survival, same cohort logic as above:
| Industry | 1-year | 5-year | 10-year | 30+ years |
|---|---|---|---|---|
| Agriculture, forestry, fishing, and hunting | 85.7% | 61.8% | 53% | 14.8% |
| Utilities | 76.9% | 61.6% | 47.2% | 24.2% |
| Other services (except public administration) | 82.6% | 60% | 42.1% | 12.6% |
| Retail trade | 84.4% | 59.8% | 44.2% | 13.7% |
| Accommodation and food services | 85.3% | 59.3% | 41.6% | 14.7% |
| Manufacturing | 80.1% | 58.4% | 45.3% | 14.5% |
| Educational services | 78.4% | 58.2% | 43.1% | 15.1% |
| Real estate and rental and leasing | 81% | 57.9% | 45% | 13.6% |
| Arts, entertainment, and recreation | 78.4% | 57.1% | 40.8% | 13.6% |
| Construction | 79.7% | 56.5% | 42.6% | 10.3% |
| Finance and insurance | 79.2% | 53.8% | 38.4% | 14.3% |
| Transportation and warehousing | 77% | 52.7% | 36.1% | 9.6% |
| Health care and social assistance | 82.1% | 52.6% | 36.4% | 14.5% |
| Management of companies and enterprises | 80.5% | 52.1% | 35.8% | 32.1% |
| Administrative and waste services | 75.7% | 51.5% | 37% | 11.1% |
| Wholesale trade | 79.5% | 51.2% | 34.4% | 10.7% |
| Professional, scientific, and technical services | 74.5% | 50.8% | 34.3% | 11.5% |
| Mining, quarrying, and oil and gas extraction | 77.7% | 48.5% | 24.5% | 11.9% |
| Information | 71.6% | 45.7% | 30% | 8.3% |
The spread is wider than the state table’s: 61.8% of new agriculture, forestry, fishing, and hunting establishments reach five years against 45.7% in information. Capital-heavy, slow-entry industries (utilities, manufacturing) hold on longest; low-barrier, high-entry ones churn hardest.
The Survivors Grow
Survival statistics read grimly until you look at what happens to the businesses that make it. The average establishment opened in March 2015 started with 4.4 employees; ten years on, the survivors of that cohort average 11.7 employees — about 2.7× their starting size. The same pattern holds in every cohort back to 1994: closures are concentrated in the early years, and the establishments that clear them keep hiring. Attrition and growth are the same process seen from two sides.
Separately, unemployment vs service hiring by state checks whether QCEW payroll employment in cleaning, landscaping, HVAC, and daycare tracks FRED state unemployment changes — a hiring correlation, not establishment survival.
For the complementary flow view — quarterly openings, closings, expansions, contractions, and job churn by state × service sector from the same BLS BED program — see service business openings, closings, and churn.
For the firm-age companion — how much of today’s employer employment sits in Census BDS firms age 5 years or younger, plus firm entry and firm-death rates by state — see young-firm job share by state. Firm age is not the same as establishment survival.
Methodology & Caveats
Closure and bankruptcy are different measures. Our business bankruptcy filings by state of court comparison reports business-debt cases for the 12 months ending June 2026 and June 2025. Court venue is not operating location, and cases are not unique failed businesses or establishment closure rates.
- Source: BLS Business Employment Dynamics, establishment age and survival tables (Table 7), national and per-state, data through March 2025. Cohorts begin March 1994.
- Establishments, not firms: the unit is a physical establishment with employment. A multi-location company counts once per location; opening a second location that later closes counts as a non-survivor even if the company thrives.
- Employer businesses only: the BLS series is built from payroll records, so it covers establishments with at least one employee. Nonemployer businesses — solo operations with no payroll, the majority of U.S. businesses by count — are outside this data entirely. SBA and Census firm-level statistics measure a different universe and will not match these rates.
- Closure ≠ failure: retirements, sales, and relocations all end an establishment’s record. Treat these numbers as churn, an upper bound on failure.
- The current 5-year cohort opened in March 2020 — the pandemic’s first month. Its 51.4% survival, slightly above the long-run 49.3% average, is itself a notable finding: the businesses that launched into COVID were evidently a hardy, deliberate group.
- Washington’s long-horizon rates are unusually low (10.6% at 15 years against a 25.5% national figure). That is what the state’s published BLS series shows — we verified it against the raw table — driven by an unusually steep loss among young establishments in the 2022–23 reference year. We report it as published.
Forming an entity is optional structure — not a survival guarantee
Choosing an LLC (or another entity) does not change these BLS establishment rates. If you do want help filing formation paperwork, ZenBusiness can file an LLC for $0 plus the state fee, in any state.
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Frequently Asked Questions
What percentage of small businesses fail?
People usually ask this as a “failure” rate, but the BLS series measures establishment exits — when a location stops reporting employment. Through March 2025: about 22.1% of new employer establishments exit within one year, 48.6% within five years, and 65.3% within ten years. Put positively: 77.9% survive year one, 51.4% survive five years, and 34.7% survive a decade. Scope: employer establishments only (payroll). Solo nonemployers are outside this series, so SBA/Census firm-level figures will not match.
Is it true that half of businesses fail in the first five years?
Roughly in the ballpark for employer establishments — with the caveat that “fail” overstates what the series measures. The BLS cohort opened in March 2020 had 51.4% of establishments still reporting employment five years later (so 48.6% had exited the series). That five-year survival rate has stayed between 45.4% and 51.9% for every cohort tracked since 1994 (average: 49.3%).
Which state has the best business survival rate?
Pennsylvania leads with 57.1% of establishments surviving five years (cohort opened March 2020), followed by South Carolina (55.9%) and Illinois (55.6%). Washington has the lowest at 42.2%. Note the pattern: slower-growth states tend to show higher survival — fewer new entrants means less churn — so a high survival rate is not the same thing as a good market.
Does ‘closed’ mean the business failed?
Not always. The BLS counts an establishment as non-surviving when it stops reporting employment — which includes owners who retire, sell, merge, or move to another state, not just failures. Survival rates are best read as a measure of churn, and they overstate outright failure somewhat.
Which industry has the best business survival rate?
Nationally, agriculture, forestry, fishing, and hunting leads at the five-year mark (61.8% of the March 2020 cohort still operating), with utilities close behind. Information has the lowest five-year survival at 45.7%. The BLS publishes industry survival nationally only — no official state-by-industry survival rate exists, and any site quoting one is estimating.
Do the businesses that survive actually grow?
Yes, and steadily. The average establishment opened in March 2015 started with 4.4 employees; the survivors of that cohort averaged 11.7 employees by March 2025 — roughly 2.7× the starting size. Survival and growth travel together in every cohort the BLS tracks.
Sources & Citation
| Data | Source | Vintage |
|---|---|---|
| Establishment survival by opening-year cohort, US + 51 jurisdictions | U.S. Bureau of Labor Statistics, Business Employment Dynamics — establishment age and survival | through March 2025 |
All rates on this page are computed from the raw BLS cohort tables. You are welcome to cite them with attribution and a link to this page.