Small Business Survival Rates: What the Data Actually Says

Business survival statistics get quoted constantly and understood rarely. The figure most people have heard is that half of businesses fail in five years. That number is roughly right and almost always presented in a way that makes it more frightening than the underlying data supports.

This is what the federal data actually says, where it comes from, and what the numbers do not mean.

Where the real numbers come from

The Bureau of Labor Statistics runs a program called Business Employment Dynamics. As part of it, the BLS tracks every private establishment in the country from the year it opens, and counts how many are still operating each year afterward. The results are published in Table 7.

This is a census rather than a survey. It is not a sample, not self-reported, and not an estimate. That makes it the strongest available source on this question.

The actual survival rates

Rather than mixing figures from different years, it is more honest to follow one group the whole way through. Of the 677,876 private establishments that opened in the year ended March 2015:

After one year, 539,701 were still operating. That is 79.6%.

After two years, 468,293 remained, or 69.1%.

After five years, 340,281 remained, or 50.2%.

After ten years, 235,071 remained, or 34.7%.

So the folklore is close on the five-year figure. Roughly half make it, and that has been broadly stable across cohorts for three decades.

The caveat that changes the interpretation

Here is the part that almost never gets quoted alongside the number. An establishment stops counting as surviving once it stops reporting employment. That includes closures, but it also includes:

Owners who sell the business to someone else. Businesses that merge into another company. Owners who retire and wind down deliberately. Establishments that relocate across state lines and re-register.

None of those are failures. Some of them are the best possible outcome. The survival rate is therefore an upper bound on the failure rate, not a measurement of it. The real proportion of businesses that fail is lower than 50% at five years, though the data does not tell us by how much.

The other detail worth knowing is that the unit is the establishment, meaning a single physical location, not the company. A business that opens a second location which later closes registers a non-survivor even if the company itself is thriving.

Why the first year is the steepest drop

The largest single fall happens between year zero and year one, from 100% to 79.6%. After that the curve flattens considerably. Between years five and ten the business loses roughly 15 percentage points across five full years, compared to over 20 points in the first year alone.

The practical reading is that survival gets easier, not harder. A business that reaches year two has already cleared the steepest part of the slope.

What this means if you are deciding whether to start

Three things follow from the data that do not follow from the folklore.

First, the odds at one year are strongly in your favor. Four in five make it.

Second, the five-year figure includes people who sold up and people who retired. It is not a measure of how many attempts ended badly.

Third, the risk is front-loaded. Runway matters more than almost anything else, because the highest-risk period is the one before revenue is established. Our calculators cover the breakeven and runway math directly.

You are not attempting something unusual

Alongside the survival data it is worth knowing the scale of what is happening around you. Roughly 5.6 million business applications were filed in 2025, a record. Census figures put nonemployer businesses at 78.4% of all US establishments, over 30 million of them.

Our market data page presents the full cohort with an interactive view of all four milestones, sourced directly from BLS Table 7.

What actually improves your odds

The data does not identify causes, only outcomes. What it does show is that the highest-risk window is early, which points at the things that extend that window: keeping fixed costs low, reaching revenue sooner, and having enough runway to survive the gap.

Free advisor support exists for exactly this and is used by a fraction of the people eligible for it. SCORE mentors and Small Business Development Centers cost nothing.

How survival varies by industry

The headline figure averages across every industry, which hides real variation. Sectors with high fixed costs, thin margins and intense local competition consistently sit below the average. Food services and retail are the standard examples, where premises, inventory and staffing all arrive before revenue is established.

Sectors with low fixed costs tend to do better, for reasons that follow directly from the runway arithmetic. A business that can survive a slow quarter without burning through cash has more chances to correct course than one carrying rent and payroll.

The BLS publishes survival tables by industry as well as nationally, so if your sector matters to you the underlying data is available rather than something to be guessed at.

Survival is not the same as success

A business can survive for a decade while paying its owner less than a job would. The survival tables count operation, not profitability, and certainly not whether the owner is glad they did it.

This cuts both ways. Some businesses that closed were successes: the owner learned what they needed, sold the assets, and moved on deliberately. Some that survived were not.

Using survival as a proxy for whether the attempt was worth making imports an assumption the data does not support.

Why the folklore is more pessimistic than the data

Three things distort the popular version of these numbers.

The first is the caveat about what non-survival means. Sales, mergers and retirements all count as non-survival, so the failure rate is necessarily lower than the survival rate implies.

The second is that the establishment, not the firm, is the unit. A growing company that opens a second location which later closes generates a non-survivor while thriving overall.

The third is selection in what gets repeated. Failure is a more interesting story than steady continuation, so the failure statistic travels further than the survival one, even though they are the same number viewed from opposite sides.

What the data cannot tell you

It is worth being precise about the limits. The BLS tables record outcomes, not causes. They can tell you that half of establishments stop operating within five years. They cannot tell you why any particular one did.

They also say nothing about your specific business. A cohort rate is a description of a population, and applying it to an individual case is a category error. The number is context, not a forecast.

Using the data as a planning input

The most useful thing to take from the survival curve is its shape rather than any single point on it.

The risk is heavily front-loaded. That points directly at the decisions that extend the early period: keeping fixed costs low, reaching revenue sooner, and holding enough runway to survive the gap between them.

Our breakeven calculator works out how many sales are needed to cover fixed costs, which is the practical version of this question.

Where to see the full cohort

Our market data page presents the March 2015 cohort at one, two, five and ten years, drawn directly from BLS Table 7, with the underlying table linked so you can read it yourself.

The table covers cohorts back to 1994, so if you want to know whether recent years look unusual against the long run, the answer is available rather than a matter of opinion.