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“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 computes the actual 1-year, 5-year, and 10-year survival rates — nationally and for all 50 states plus DC — from those cohort tables.
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 famous claim that “half of businesses fail in five years” is roughly accurate: 48.6% of the March 2020 cohort was gone by March 2025.
- 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.
Survival Rates by State
Ranked by 5-year survival — the share of establishments opened in March 2020 still operating in March 2025. The 1-year column tracks the March 2024 cohort; the 10-year column the March 2015 cohort. Click any state for its full startup guide.
| Rank | State | 1-year survival | 5-year survival | 10-year survival |
|---|---|---|---|---|
| — | United States | 77.9% | 51.4% | 34.7% |
| 1 | Pennsylvania | 78.8% | 57.1% | 36.4% |
| 2 | South Carolina | 82.3% | 55.9% | 35.7% |
| 3 | Illinois | 79.7% | 55.6% | 38.4% |
| 4 | Michigan | 77.6% | 55.0% | 35.7% |
| 5 | Maine | 76.9% | 54.9% | 37.6% |
| 6 | Minnesota | 79.4% | 54.9% | 41.9% |
| 7 | North Dakota | 79.1% | 54.4% | 32.8% |
| 8 | Ohio | 78.7% | 54.4% | 38.4% |
| 9 | Indiana | 79.5% | 54.3% | 38.5% |
| 10 | North Carolina | 76.1% | 54.2% | 37.2% |
| 11 | Kentucky | 78.7% | 54.1% | 36.4% |
| 12 | California | 80.3% | 53.7% | 34.1% |
| 13 | Iowa | 80.2% | 53.7% | 39.9% |
| 14 | West Virginia | 76.3% | 53.6% | 38.0% |
| 15 | Mississippi | 77.9% | 53.5% | 35.9% |
| 16 | Montana | 78.3% | 53.0% | 38.5% |
| 17 | Louisiana | 80.4% | 52.9% | 35.6% |
| 18 | Massachusetts | 76.4% | 52.7% | 36.2% |
| 19 | South Dakota | 78.5% | 52.7% | 38.8% |
| 20 | Texas | 78.4% | 52.5% | 36.6% |
| 21 | Wisconsin | 79.5% | 52.4% | 37.4% |
| 22 | Arizona | 79.0% | 52.1% | 34.3% |
| 23 | New York | 79.6% | 51.9% | 33.7% |
| 24 | Alabama | 77.1% | 51.4% | 36.4% |
| 25 | Connecticut | 78.2% | 51.1% | 31.2% |
| 26 | Hawaii | 77.1% | 51.0% | 41.9% |
| 27 | Nebraska | 78.8% | 50.9% | 32.6% |
| 28 | Alaska | 74.4% | 50.8% | 33.4% |
| 29 | New Jersey | 79.3% | 50.5% | 34.0% |
| 30 | Oklahoma | 73.5% | 50.2% | 31.9% |
| 31 | Maryland | 75.5% | 50.1% | 34.6% |
| 32 | Georgia | 75.1% | 49.9% | 32.1% |
| 33 | Utah | 76.3% | 49.7% | 35.5% |
| 34 | Florida | 76.0% | 49.5% | 34.0% |
| 35 | Virginia | 76.0% | 48.8% | 30.4% |
| 36 | Colorado | 75.9% | 48.5% | 31.9% |
| 37 | Delaware | 72.8% | 48.1% | 29.6% |
| 38 | Rhode Island | 77.9% | 48.1% | 33.3% |
| 39 | Arkansas | 76.6% | 48.0% | 31.8% |
| 40 | New Hampshire | 75.1% | 47.7% | 31.5% |
| 41 | Nevada | 75.9% | 47.6% | 32.9% |
| 42 | Wyoming | 75.2% | 47.5% | 28.9% |
| 43 | Kansas | 76.4% | 47.4% | 34.6% |
| 44 | Vermont | 75.9% | 46.6% | 35.4% |
| 45 | Tennessee | 70.7% | 46.4% | 32.8% |
| 46 | New Mexico | 77.0% | 46.3% | 27.4% |
| 47 | Oregon | 73.3% | 45.8% | 37.1% |
| 48 | Idaho | 76.6% | 45.6% | 33.3% |
| 49 | Missouri | 74.1% | 42.9% | 29.7% |
| 50 | District of Columbia | 67.1% | 42.4% | 27.3% |
| 51 | Washington | 82.5% | 42.2% | 31.7% |
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. 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 fail — see our SBA loan statistics.
Methodology & Caveats
- 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.
- 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.
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Frequently Asked Questions
What percentage of small businesses fail?
Per the Bureau of Labor Statistics’ establishment-survival data (through March 2025): about 22.1% of new establishments close 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.
Is it true that half of businesses fail in the first five years?
Roughly, yes — and it’s one of the few business statistics the folklore gets right. The BLS cohort opened in March 2020 had 51.4% of establishments still operating five years later. That five-year survival rate has stayed between about 45% and 57% 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.
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.